Medical expenses not subject to tax telephone

  • No School
  • AA 1
  • 49

This preview shows page 10 - 18 out of 49 pages.

Medical expenses – not subject to tax. Telephone expenses – portion attributable to private use is taxable. Loans – benefit on interest-free loans arises at LIBOR+5%. None arises for educational and technical training or medical treatment of the employee, spouse or child.
Image of page 10

Subscribe to view the full document.

11 INCOME TAX Gross Income-S8(1)(f) How are the fo.llowing benefits taxed? Use of paid for drivers. Passage benefits (also apportionment of costs). Use of employer owned furniture – practice is to tax employee on 8% of the cost of the furniture. E.g. A finance director is offered new employment and is offered a fully furnished house. The cost to the employer of the furniture was $24,000. Calculate the annual benefit and make a comparison of how much the employee would have needed to earn to afford similar furniture in a period of 12 months (do not consider interest or finance charges).
Image of page 11
12 INCOME TAX Gross Income-S8(1)(f) Employer provides furniture Cost of furniture to employer 24,000 Tax savings on capital allow. available to employer 6,180 Annual benefit ($24,000 x 8%) 1,920 Annual PAYE at the rate of 36.05% 692 Annual PAYE for 4 years 2,769 Employee purchasing furniture Gross amount to be earned to afford furniture 37,529 Tax deduction savings to employer 9,664 Tax payable on gross to achieve net amt required 13,529 Cost of furniture 24,000
Image of page 12

Subscribe to view the full document.