Tax relief for employers who help pay off employees’ PTPTN loans

“Payment can be made in a lump sum, portioned out, — monthly, for example — and it is up to the employers to decide on the quantum.” — Mastura

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Employers who help their employees payback their PTPTN loans this year will receive tax relief of the full amount they pay.

PTPTN deputy CEO (Policy and Operations) Mastura Mohd Khalid tells The Edge, employers who make payments from Jan 1 to Dec 31 this year will qualify for tax relief, as stipulated under Budget 2019.

If a company pays RM50,000 to cover its employees’ PTPTN loans, she says, its taxable income would be reduced by RM50,000.

She adds that the move will benefit both employers and their staff. The former’s taxable income will be reduced and the latter will be able to increase their savings and become more financially stable, contributing to overall productivity and employee satisfaction.

“It is a win-win situation because through the government’s PTPTN loan scheme, students are taught the skills they need and are groomed to take their place in the labour market. Now, as part of their corporate social responsibility, employers can help pay back these loans,” says Mastura. All employers, she says — whether they be small to medium enterprises or large corporations — who pay income tax under the Income Tax Act 1967 are eligible to take part in this initiative. Employees must be full-time and or permanent staff.

Those paying for employees who are partners, children, grandchildren or siblings of the employers are not entitled to take part the programme. In addition, those who are self-employed do not qualify. It is important to note that employers making the payments cannot seek repayment from the staff they are paying on behalf of or they will not qualify for the tax relief. All payments made to PTPTN to settle the loans of employees are on a voluntary basis.

“As a reminder, if employers order their employees to repay them, the latter can submit their complaints to PTPTN and the Inland Revenue Board for investigation.” Mastura says, adding that there is no limit to how much can be paid as it depends on company policy and its resources.

“Payment can be made in a lump sum, portioned out, — monthly, for example — and it is up to the employers to decide on the quantum.”

Payment can be made via the PTPTN website, www.ptptn.gov.my. A receipt will be issued and, from early next year, employers will be able to view a statement of the payments made on behalf of their employees.

“We hope the scheme will be continued in Budget 2020,” says Mastura, adding that employers can use it to reward loyal employees and productivity would increase as employees would no longer have to worry about repaying their PTPTN loans.

She highlights that this scheme does not mean that the onus of repayment will be shifted to employers. She says there are various options available to service the loans such as online bank transfer, direct debit or deductions from Account II in the Employees Provident Fund.

“I hope all those that employ PTPTN loan holders take up this initiative, the latest addition to the many incentives available to employers and employees who settle PTPTN loans,” says Mastura.