This guide will assist you in determining the value of BIK (Benefit in Kind).
There are two methods when it comes to determining the value of the BIK:
First Method: Formula Method
- Each benefit provided to the employee is ascertained by using the
following formula:
- Cost of asset provided divided by prescribed average life span of the asset equals to the annual value of the benefit.
- The benefit can be abated if the benefit is:
i. Shared with another employee, and/or
ii. Provided for less than a year, and / or
iii. Used for the purpose of the business of the employer.
Second Method: The Prescribed Value Method
- Whichever method is used in determining the value of the benefit provided, the basis of computing the benefit (whether the formula method or the prescribed value method) must be consistently applied throughout the period of the provision of the benefit.
- The benefit can be abated if the benefit is:
i. Shared with another employee, and/or
ii. Provided for less than a year
END OF GUIDE