Tertiary education can be expensive. However, it is a form of investment today for a better tomorrow.
Since 1997, tertiary education has become more accessible with the establishment of the National Higher Education Fund Corporation (PTPTN) under the National Higher Education Fund Corporation Act 1997 (Act 566).
PTPTN helps students pay for tuition and living costs throughout the school year – enabling undergraduates to access to further their studies.
After graduation, many individuals find repayment of their education loan a daunting task.
But fear not, as between 1 January 2019 to 31 December 2019, employers can assist their employees in fulfilling this responsibility.
Tax incentives
According to the 2019 Budget, employers who help their employees pay off their PTPTN debts are eligible for tax relief. Employers eligible for this incentive are taxpayers who have a registered business, including a sole proprietorship, and pays tax under the Income Tax Act 1967.
To qualify for this incentive, employers must meet three conditions.
First, the employer is making debt repayments on behalf of the employees. Second, employees are full-time staff. And third, the employer will not be charging its employees for the PTPTN debt payment.
Interestingly, there is no minimum or maximum amount set to be qualified for this incentive. Employers are entitled to tax relief on any repayment amount made, either monthly installment payments or a full settlement between 1 January 2019 to 31 December 2019.
No limit on tax relief
With this incentive, employers will receive tax relief in the same amount that has been paid for their employees.
If an employer repays RM50,000 worth of loan to PTPTN for their employees, then the employer is entitled to the same tax relief. The payment would benefit both the employer and the employee.
This move is also a form of corporate social responsibility for the employers and their companies. The government, through PTPTN, has previously provided loans to students to generate the best human capital and prepare them for the job market.
Mechanism
Employers can make repayments on their employees’ behalf through the PTPTN official portal at www.ptptn.gov.my from 1 January 2019 to 31 December 2019.
Once employers made the payment through the PTPTN portal, employers can then print the receipt. PTPTN will also issue PTPTN debt repayment statements in early 2020.
Do note that there are several categories of employers who are not eligible for this incentive. These include PTPTN borrowers who run their businesses and are employers of the company.
Employees who are either the employers’ spouses, children, grandchildren, or siblings are also not entitled for this incentive.
Employees can complain with PTPTN if the employer instructs them to make a payment for the payment made.
The Inland Revenue Board of Malaysia (LHDN) will then receive the report for investigations. A false claim for tax relief is an offense under the Income Tax Act 1967.
Seize the opportunity
PTPTN offers incentives for the first time to employers this year. Therefore, every employer needs to seize this opportunity to help boost the morale and motivation of their employees.
In the United States, the repayment of higher education loans by employers is one of the benefits used to attract and retain workers from the Millenials.
Employees repay their education loans as usual while employers will match the amount paid.
This method helps to accelerate the loan repayment process. It is also more attractive to the employees and potential staff than an offer of high base salaries alone.
Among the employers offering these benefits are accounting firm PriceWaterhouseCoopers, technology company NVIDIA, and law firm Orrick, Herrington & Sutcliffe.
In Malaysia, some employers are offering annual bonuses, travel incentives, or give a pay raise to reward employee’s performance. For this year, they can make a little difference by helping pay off their employees’ PTPTN debt. Indirectly, this would help employees reduce the burden of their debt, while the employers also get tax relief.
This incentive would also enhance the employers’ image while attracting more potential talent to work in their organization.
Employers who are interested in this opportunity to benefit their employees and businesses can visit the PTPTN official portal at Portal Majikan Online.