dipn16_salary tax_benefits

Where such a card is used for private purposes by an

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Unformatted text preview: Credit Cards 33. Credit cards are sometimes provided by employers to employees under arrangements where expenses charged using the card are billed to and 8 paid for the employer. Where such a card is used for private purposes by an employee, the Department considers that the benefit obtained is chargeable to Salaries Tax. This is because in ordinary usage the holder of the card (i.e. the employee) has a liability to pay for the goods or services received which is effectively discharged by the employer when the card is used. As discussed in para. 19 above, the amount of the liability so discharged represents a chargeable benefit. Club Benefits 34. It is accepted that no chargeable benefit arises in respect of the cost of acquisition of corporate membership of a club. The Department recognizes that as entitlement to corporate membership benefits may be transferred from one employee to another it is not possible to attribute such expenditure to a particular employee. On the other hand, where an employer makes a payment in respect of an individual membership fee or other club expense for which an employee is personally liable, the payment will constitute chargeable income of the employee. Holiday Journey Benefits 35. Prior to 1 April 2003, the value of any holiday warrant or passage granted by an employer to an employee was exempt from salaries tax, as long as the benefit had been used for travel. Similarly, allowance for the purchase of holiday warrant or passage and allowance for the transportation of the employee’s personal effects in connection with the holiday warrant or passage were exempt, in so far as they had been used for the purpose. Following the enactment of Revenue (No. 2) Ordinance 2003 which came into effect on 1 April 2003, the exemption from tax of such benefits has been removed. 36. In addition, section 9(2A) was amended to the effect that all payments by an employer in connection with a holiday journey for the benefit of the employee, irrespective of whether it is convertible into cash and whether the primary liability for the benefit is the employee’s own, the actual amounts paid by the employer will be assessable to tax with effect from 1 April 2003. For details, please refer to Departmental Interpretation & Practice Notes No. 41. 9 Note 1. In contrast, a different approach is adopted by the Department on holiday journey benefits accruing from 1 April 2003, see Departmental Interpretation & Practice Notes No. 41, para. 18. Section 9(2A) was further amended by Revenue (No. 2) Ordinance 2003 to provide for the taxation of holiday journey benefits with effect from 1 April 2003. The definition of “holiday journey” was further added by Revenue (No. 2) Ordinance 2003. The relevant phrase was changed to “any benefit that is capable of being converted into money by the recipient” by the Revenue (No. 2) Ordinance 2003. This approach is not applicable to holiday journey benefits accruing from 1 April 2003. For details, see Departmental Interpretation & Practice Notes No. 41. Holiday journey benefits accruing from 1 April 2003 are excluded. For taxation of holiday journey benefits, see Departmental Interpretation & Practice Notes No. 41. 2. 3. 4. 5. 6. 10...
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