Do you know Employment Retention Program (ERP) entitled to tax exemption?

Do you know Employment Retention Program (ERP) entitled to tax exemption?

Overview

On 22.10.2020, The Minister issue a gazette order Income Tax (Exemption) (No. 4 & 5) Order 2020 to exempts fund received by the employer and employee under the Employment Retention Program (ERP).

Key takeaway

You will understand the:

  • Employment Retention Program (ERP)

  • Tax treatment

  • Effect for year of assessment

Summary of learning

The meaning of Employment Retention Program (ERP)

*    Employment Retention Program (ERP) is a program under the Economic Stimulus Package 2020 managed by Social Security Organisation that provides financial assistance of RM600 per month to an employee:

(a) who is given notice of unpaid leave by his employer for a period between 1 March 2020 until 30 June 2020

(b)  whose salary is not more than RM4,000 a month; and

(c)   who is registered and contributed to the Employment Insurance System (EIS)

Tax treatment to Employer on ERP

*    In order to qualify for this exemption, employer shall receive ERP from Social Security Organisation on or after 20 March 2020 but not later than 15 June 2020

*    Employer shall maintain a separate account for the income exempted

Tax Treatment to Employee on ERP

*    Any financial assistance received from his employer under the ERP are tax exempted

Effect for year of assessment

*    Effective from year of assessment 2020

Source

INCOME TAX (EXEMPTION) (NO. 4) ORDER 2020

INCOME TAX (EXEMPTION) (NO. 5) ORDER 2020TP 

Taxable income on ERP ????

Taxable income on ERP ????

 
 
HRKtp KtpEmploymentAct, 马来西亚劳工法令