non-resident individual income tax - Lembaga Hasil Dalam Negeri

Form M 2009 Guidebook
Self Assessment System
APPENDIX B1:
GRATUITY
A. Gratuity
Gratuity is a gift of money for services rendered and is received/receivable upon retirement or termination of a contract
of employment. Gratuities are liable to tax except those listed in item C on Appendix page 6.
B. Computation of Taxable Gratuity
In computing the amount of taxable gratuity, the basis periods for which it is paid have to be considered in accordance
with the proviso to subsection 25(4).
Basis of apportionment:
Method 1
The amount of taxable gratuity shall be treated as accruing evenly over the period of continuous employment with
the same employer or companies within the same group. (refer to Example I)
OR
Method 2
If the period of continuous employment with the same employer or companies within the same group commenced
more than five (5) years before the commencement of the basis period in which the employment ceases, the
amount of taxable gratuity shall be apportioned equally for the last six (6) years of assessment. (refer to Example II)
Example I
An employee ceased employment at the age of 40 after five months of service with the same employer.
Period of employment : Commencement - 01.10.2008
Cessation - 29.02.2009
Amount of gratuity : RM5,000
Length of service : 151 days (Use Method 1)
Basis period for the year ending : 31.12.2006 (01.10.2008 - 31.12.2008) = 92 days
31.12.2007 (01.01.2009 - 28.02.2009) = 59 days
Total 151 days
Apportionment of gratuity according to the Year of Assessment:
1 2 3 4 5
Apportionment Period Computation Amount Year of
(year) (days/year) RM Assessment
(i) 2008 92 days 92/151 x 5,000 3,046 2008
(ii) - - - - -
(iii) - - - - -
(iv) - - - - -
(v) - - - - -
(vi) 2009 59 days 59/151 x 5,000 1,954 2009
Transfer the amount from item 4(i) for the previous year of assessment to Part F Form M.
Transfer amount 4(vi) for the current year of assessment to item A2 Working Sheet HK-2.
Appendix page - 5