Recently the government provided a real boost for retrenched workers in its 2nd stimulus package announcement
It announced that companies who employ workers retrenched from 1 July 2008 be given double tax deduction * on the amount of remuneration paid.
This allows companies to enjoy big tax savings by employing retrenched workers.
How does it work?
If an employer recruits a retrenched worker from another company and pays a salary of RM24,000 a year. Normally, tax deduction to the employer is RM24,000 from taxable profit. However, with this measure, the company is allowed to deduct RM48,000 from profit, that is, at double the salary. This represents an additional tax reduction for the company of RM6,000 or 25% from RM24,000.
If you are in this situation, now is the best time to get that interview because companies are much more likely to hire a retrenched worker because of this government incentive!
* The amount of remuneration eligible for this deduction shall not exceed RM10,000 per month and is limited 9 up to 12 months remuneration per employee. This incentive is applicable to workers employed from 10 March 2009 to 31 December 2010.