Saturday, March 11, 2006

Inland Revenue Board - Public Rulings 1 & 2/2006

Public Ruling 1/2006 - Perquisites From Employment

Date of Issue - 17 January 2006

This ruling, in general, explains the distinction between perquisites and benefits-in-kind (BIK), in relation to an employment, the types of perquisities, tax treatment and the employer's responsibilities upon granting of perquisites to the employee and the employee's responsibilities on receiving such perquisites.

Common perquisites given to employee:
  • pecuniary liability of employees paid by employer eg. income tax payment, electricity bills, water and telephone bills
  • credit card facilities
  • loan interest
  • recreation club membership
  • gardener, driver, domestic help or guard
  • scholarship
  • assets given FOC or sold at discount
  • gift vouchers
  • professional subscriptions
The value of perquisites received by employee is treated as his gross income.

Employer is required to report in Form E and the employee's Form EA & EC all such payments including benefits provided for the spouse, family, servants, dependent or guest of the employee, and to keep records and receipts pertaining to this for a period of seven (7) years.

Failure to comply will render YOU liable for prosecution or penalty.

Effective Year of Assessment : 2005

Public Ruling 2/2006 - Tax Borne by Employers

Date of Issue - 17 January 2006

This ruling explains the computation of perquisites relating to income tax of the employee borne by the employer and tax payable by the employee who is entitled to this perquisites.

Effective Year of Assessment : 2005

If you have submitted your tax returns, have you complied?

If you have not submitted your tax returns, ensure you comply!


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