When a motorcar is provided to an employee, the Benefit-in-Kind (BIK) is assessed based on the employee's private use of the vehicle and any related benefits provided, such as petrol.

A motorcar is generally considered to be used for private purposes if:

• It is used for travelling between home and the workplace.

• It is kept at the employee's residence.

• It is available for personal or family use outside of official duties.

Where private use exists, the benefit is considered taxable and must be included in payroll for PCB (Monthly Tax Deduction) calculation purposes. 

Scenario:

Employee A is provided with a new Toyota Hilux costing RM95,000 in the year 2019. The vehicle is available for the employee's use throughout the entire year. The taxable BIK can be calculated using either of the following methods.

A) Formula Method

Under the Formula Method, an abatement of 20% is applied to account for vehicle depreciation upon its return to the employer. 

Annual BIK Value
 = Cost of Motorcar ÷ 8 Years × 80%

= RM95,000 ÷ 8 × 80%

= RM9,500 per year

B) Prescribed Value Method

Under the Prescribed Value Method, the BIK value is determined according to Appendix 2 – The Prescribed Value of Motorcars and Related Benefits issued by the tax authority.

The valuation is based on the original cost of the vehicle and applies to:

• New vehicles

• Second-hand vehicles

• Leased vehicles

For a motorcar costing RM95,000, the prescribed annual BIK value is:

= RM3,600 per year