Compensation Loss of Employment

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Introduction

Rules:

1. Compensation exempted from income tax is RM10,000 x no of years of service.
2. Determine the number of completed year of service. For example, employee has served for 5 completed year of service


  • 1/5/2004 - 30/4/2005 (year 1)
  • 1/5/2005 - 30/4/2006 (year 2)
  • 1/5/2006 - 30/4/2007 (year 3)
  • 1/5/2007 - 30/4/2008 (year 4)
  • 1/5/2008 - 30/4/2009 (year 5)
  • 1/5/2009 - 25/3/2010 (n/a, less than one completed year of service)


3. Tax exemption on compensation
  • RM10,000 x 5 years of service = RM50,000


Workings:

Compensation paid (key in Pending Compensation) = RM75,0000
Less: Amount of exemption RM50,000.00
Balance of compensation subject to MTD RM25,000.00


Balance of compensation of RM25,000.00 after deducting the qualifying exemption will be subject to MTD and the MTD shall be calculated using Additional Remuneration PCB (A) Formula and report in EA form (B6).

Pending Compensation

Menu : Payroll | Open Pending Payroll...

Key-in the total compensation amount in pending compensation. eg. compensation aamount RM75,000.
400PX


Payroll Process

Menu : Payroll | New Payroll...

Compensation amount RM75,0000 will process in the month of pay.
300PX


EA Form

Menu : Payroll | Government Reports | Print Income Tax EA Form...

Compensation paid = RM75,0000
Less: Amount of exemption = RM50,000.00
Balance of compensation taxable will be shown in EA (B6) = RM25,000.00


400PX


See also