Guides
Bonus and Allowances: Is Everything Taxable?
Updated: 8 November 2026 Independently fact-checked.
What are bonuses and allowances for tax purposes?
In Malaysian income tax, bonuses and allowances are part of gross employment income under subsection 13(1)(a) of the Income Tax Act 1967 (ITA 1967).
The Act's text says gross employment income includes:
In plain terms: wages, salary, remuneration, leave pay, fees, commission, bonus, gratuity, perquisite or allowance (in money or otherwise) received in respect of employment.
Source: Income Tax Act 1967, s.13(1)(a) (see Official sources section).
Bonuses — included in taxable income
A bonus received in respect of your employment is taxable income unless exempted by a specific provision.
Bonuses are included in gross income in the year they are received (accrued/received basis). This means a bonus you receive in year of assessment 2026 is normally reported in that year, together with your salary and other receipts.
Source: HASiL — Introduction to Individual Income Tax; Income Tax Act 1967, s.13(1)(a) (see Official sources section).
Allowances — generally taxable, unless exempted
Allowances are generally part of gross employment income and are taxable. An exemption applies only where granted by a specific official provision or exemption.
Source: Income Tax Act 1967, s.13(1)(a); HASiL — Introduction to Individual Income Tax (see Official sources section).
Distinguish from perks (perquisites)
Bonuses and allowances (cash or other receipts) are part of gross employment income. They are different from non-cash fringe benefits (perquisites) such as benefits-in-kind (BIK) or the value of living accommodation (NTK), which have their own valuation rules.
Source: Income Tax Act 1967, s.13(1)(a) (see Official sources section).
How is it reported?
- Form EA: your employer prepares the Annual Remuneration Statement (Form EA) listing the salary, bonus, allowances and other benefits paid to you in that year.
- Form BE / Form B: you transfer the employment income amounts from Form EA into your return form when filing.
Source: Form BE Explanatory Notes — YA 2025 (see Official sources section).
About PCB calculation for bonuses
Calculation of Monthly Tax Deduction (PCB) involving bonuses is not covered in this article.
Source: (no PCB calculation figures in this draft).
Simple example
Amira works as a graphic designer and receives a monthly salary of RM5,000. In December 2026 she receives an annual bonus of RM8,000 and a travel allowance of RM200 per month. All these receipts are employment income under s.13(1)(a) — the bonus and allowances must be reported together with her salary in the year received, and her employer will show these amounts in Form EA.
Daniel receives a housing allowance from his employer. The allowance is part of gross employment income. Daniel checks with HASiL whether any specific exemption applies before assuming it is tax-free.
(Illustrative example to show the concept — not specific tax advice.)
Frequently Asked Questions (FAQ)
Q. Is a bonus taxable? A. Yes — a bonus is part of gross employment income under s.13(1)(a) ITA 1967 and is taxable unless exempted by a specific provision. It is reported in the year it is received.
Q. Are allowances taxable? A. Generally yes — allowances are part of gross employment income. Exemption applies only where granted by an official provision. Verify your specific allowance type with HASiL.
Q. How do I know my salary, bonus and allowances? A. Refer to Form EA prepared by your employer. Employment income amounts are transferred to Form BE/B when filing.
Q. Are travel allowances exempted? A. This draft does not list specific allowance exemptions — any example of an exempted allowance is unverified this item still awaits official confirmation from HASiL — check again with HASiL before deciding. Verify with HASiL.
Q. Is bonus included in my PCB? A. PCB calculation for bonuses is not covered in this article this item still awaits official confirmation from HASiL — check again with HASiL before deciding. — see the PCB/MTD guide.
Glossary
- ITA 1967 — Income Tax Act 1967 (Act 53).
- Gross employment income — income under s.13(1)(a) ITA: wages, salary, remuneration, leave pay, fees, commission, bonus, gratuity, perquisite or allowance.
- Bonus — an additional payment related to employment, included in gross income of the year received.
- Allowance — a payment related to employment; generally taxable unless exempted by an official provision.
- Perquisite — a non-cash fringe benefit (e.g. BIK/NTK).
- Form EA — annual remuneration statement prepared by the employer.
- PCB — Monthly Tax Deduction.
Official sources
All sources below were reviewed on 8 November 2026. Official HASiL pages and documents: