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Unformatted text preview: ts paid before 1 April 2003 in respect of passages in connection with education are not chargeable by virtue of the terms of sections 9(1)(a)(i) and (ii) of the Ordinance. However, with the repeal of sections 9(1)(a)(i) and (ii) by Revenue (No. 2) Ordinance 2003, these payments will be chargeable with effect from 1 April 2003. 25. In accordance with the decision in an English case, Barclays Bank v Naylor 39 TC 256, the Department recognizes that an employee does not receive a chargeable benefit where a payment is made in respect of education expenses of his or her child using income of the child which has been provided by a genuine discretionary trust funded by the employer. Car (or Boat) made available by an Employer for the Private Use of an Employee 26. Where an employee is allowed to use for private purposes a car owned by his employer, the Department accepts that the benefit is not chargeable, provided that the employee is not in any way able to convert the benefit into money [compare the position outlined at para. 22 above]. 27. If ownership of the car is transferred to the employee, the benefit is chargeable to Salaries Tax at its convertible value at the time of receipt [see para. 21 above]. 28. A chargeable benefit will also arise if the employer discharges an expense relating to private use for which the employee is liable. The assessable 7 amount will be the sum paid by the employer to discharge the expense [see para. 19 above]. Recreational Facilities/Holiday Homes provides for the Use of Employees 29. Such benefits are not chargeable to Salaries Tax, provided that the employee is not in any way able to convert the benefit into money. Payment of Utilities by the Employer 30. Where an employer is the only party liable to pay the cost of utilities provided to an employee’s residence, payments made by the employer come within the scope of the new exclusion from income [section 9(1)(a)(iv)]. Since utilities provided cannot be converted by the employee into money, the exception to the exclusion in respect of convertible benefits [section 9(2A)(a)] does not apply. As a matter of practice, if the account rendered by the utility company is in the name of the employer only, the Department will accept that no chargeable benefit arises. 31. Other benefits supplied in respect of an employee’s residence – such as furniture and domestic servants – will also not be chargeable to tax if they are provided under circumstances where the employer is the only party liable for the relevant expense and the employee cannot convert the benefit into money. Loans provided to Employees at less than Market Interest Rates 32. The Department accepts that interest-free and low interest loans provided by employers to employees are not chargeable benefits where the cost involved in providing the benefit is the sole liability of the employer. This acceptance is based on the understanding that the benefit received by the employee (i.e. paying less that market rates) is not of itself convertible into money....
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This note was uploaded on 03/11/2010 for the course BBA B415 taught by Professor Mrli during the Spring '10 term at Academy of Art University.
- Spring '10