As per the Malaysia Employment Act, there is a tax exemption of RM 10000 per year of completed with the same employer or companies within the same group for the compensation of loss of employment
You need to create two pay elements, which are Compensation (Taxable) and Compensation (Non-Taxable). Please follow the steps below:
Compensation (Taxable)
Go to the Payroll module and click Setup.
Click Pay Element Setup and click New.
Enter Pay Element ID as Compensation (Taxable), select Allowance and Next.
Click None of the above and click Next.
Click Standard Allowance, Next, Free and Finish.
Select Compensation Code, move over to the right, select Subject to Additional Tax, move over to the right and Save.
Compensation (Non-Taxable)
Go to the Payroll module and click Setup.
Click Pay Element Setup and click New.
Enter Pay Element ID as Compensation (Taxable).
Click Allowance, Next, None of the above and Next.
Click Standard Allowance, Next, Free and Finish.
Select Compensation Code, move over to the right, select Non-Taxable Code and move over to the left.
Select the Tax Reporting Code and move over to the right.