Published On: 21/03/2026By

When preparing CP8D (Borang CP8D), many employers focus only on basic salary and allowances.

However, one commonly overlooked area is perquisites.

Some employers assume that non-salary benefits or gifts given to employees do not need to be reported.

This is not correct.

In Malaysia, certain employee benefits — especially those that can be converted into monetary value — must be included in CP8D reporting.

Failing to report these correctly may lead to inaccurate tax reporting and potential audit risks.

This guide explains:

  • What perquisites are in payroll

  • How they differ from salary and Benefits-in-Kind (BIK)

  • Why perquisites must be included in CP8D

  • Common employer mistakes to avoid

What Are Perquisites in Malaysia Payroll?

Perquisites refer to benefits provided by an employer to an employee that can be converted into cash or have monetary value.

Unlike basic salary (which is stated in the employment contract or offer letter), perquisites are typically additional rewards or benefits given by the employer.

These benefits form part of the employee’s total remuneration and may be taxable under Malaysian income tax rules governed by the Inland Revenue Board of Malaysia (LHDN).

Key Difference: Salary vs Perquisites vs Benefits-in-Kind (BIK)

Understanding the difference is important for accurate CP8D reporting.

Salary

  • Fixed income stated in the offer letter

  • Paid in cash

  • Forms the base of employee remuneration

Perquisites

  • Benefits that can be converted into cash

  • Given as additional rewards or incentives

  • Must be included in taxable income

Benefits-in-Kind (BIK)

  • Non-cash benefits that cannot be converted into cash

  • Usually owned or controlled by the employer

  • Still reportable, but classified differently

Examples of Perquisites Employers Often Miss

Many employers unknowingly provide perquisites without realising they must be reported.

Common examples include:

  • Gifts such as watches, gadgets, or vouchers given as rewards

  • Utility payments (electricity, water bills) paid by the employer

  • Car-related expenses such as insurance paid on behalf of employees

  • Cash-equivalent benefits provided as incentives or rewards

These benefits have monetary value and are therefore considered part of employee income.

As a result, they must be included in CP8D reporting.

Why Perquisites Must Be Included in CP8D

CP8D requires employers to report complete employee remuneration for the year.

This includes:

✔ Salary
✔ Allowances and bonuses
✔ Perquisites
✔ Benefits-in-Kind (BIK)
✔ Statutory deductions (PCB, EPF, etc.)

The purpose of CP8D is to allow LHDN to:

  • Verify total employee income

  • Cross-check tax deductions (PCB)

  • Ensure accurate tax reporting

If perquisites are excluded, the employee’s income may be under-reported, which can lead to:

❌ Payroll inconsistencies
❌ Incorrect tax filing by employees
❌ Increased audit risk

Common Mistakes Employers Should Avoid

When preparing CP8D, employers often make these mistakes:

1. Ignoring Non-Salary Benefits

Many companies only report salary and allowances but exclude perquisites, especially small-value benefits.

2. Confusing Perquisites with BIK

Employers sometimes misclassify benefits:

  • Perquisites = convertible to cash

  • BIK = not convertible to cash

Misclassification can lead to incorrect reporting.

3. Not Tracking Employee Benefits Properly

Without a proper system, HR teams may not have a complete record of:

  • Gifts given to employees

  • Expenses paid on behalf of employees

  • Incentives provided throughout the year

This results in incomplete CP8D data.

Employer Best Practices for CP8D Compliance

To ensure accurate reporting, HR and payroll teams should:

✔ Keep records of all employee benefits throughout the year
✔ Identify which benefits qualify as perquisites
✔ Ensure payroll data matches Form EA and CP8D
✔ Review remuneration components before submission

Maintaining structured records reduces the risk of errors during tax reporting.

Simplify CP8D Reporting with an Integrated HR System

Tracking perquisites manually can be difficult, especially for companies with multiple employees and benefit types.

A structured HR system helps employers:

✔ Record all employee benefits in one place
✔ Track remuneration components accurately
✔ Generate payroll reports for CP8D submission
✔ Reduce manual errors and compliance risks

With Pandahrms, employers can manage payroll, employee records, claims, and benefits within a single platform.

This ensures that all remuneration components — including perquisites and BIK — are properly recorded and ready for reporting.

Conclusion

Perquisites are an important part of employee remuneration in Malaysia and must be included in CP8D reporting.

Even though they are not part of the basic salary, benefits that can be converted into cash still form part of taxable income.

For employers, understanding the difference between salary, perquisites, and Benefits-in-Kind (BIK) is essential to ensure accurate payroll reporting and compliance with LHDN requirements.

By maintaining proper records and using a reliable HR system such as Pandahrms, businesses can simplify CP8D preparation and avoid unnecessary compliance risks.