Fringe benefits & benefits-in-kind ▸ Household expenses ▸ All contracts of household expenses e.g. utilities, domestic helpers are entered into by the employer (i.e. liabilities are borne by the employer) ▸ For the same amount of dispensable income of an individual, salaries tax is saved with a reduced income and elimination of expenses. 51 Fringe benefits & benefits-in-kind ▸ Illustration Before arrangement Income Household expenses Net dispensable income $ Tax treatment 500,000 Taxable (240,000) Non-deductible 260,000 After arrangement Income Household expenses Net dispensable income $ Tax treatment 260,000 Taxable 260,000 52

Fringe benefits & benefits-in-kind ▸ Household expenses ▸ All contracts of household expenses e.g. utilities, domestic helpers are entered into by the employer (i.e. liabilities are borne by the employer) ▸ For the same amount of dispensable income of an individual, salaries tax is saved with a reduced income and elimination of expenses. 51 Fringe benefits & benefits-in-kind ▸ Illustration Before arrangement Income Household expenses Net dispensable income $ Tax treatment 500,000 Taxable (240,000) Non-deductible 260,000 After arrangement Income Household expenses Net dispensable income $ Tax treatment 260,000 Taxable 260,000 52

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter8: Payroll Accounting: Employee Earnings And Deductions

Section: Chapter Questions

Problem 3SEB

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