Salaries Tax - Holiday benefit
From 2003/2004 onward, holiday benefits granted by employers are
assessable under Section 9(2A)(a) of Inland Revenue Ordinance.
The assessable amount is the actual cost incurred by the employer in
providing the benefit to the employee and / or his family.
The law provides that the charge of tax is irrespective of the following
factors: (a) Whether or not the benefit is convertible into cash, (b)
Whether the employer of the employee has the primary liability to pay the
benefit, (c) Whether or not the benefit will add additional cost to the
employer, (d) Whether or not the benefit will cause opportunity cost to
the employer (for example the lost revenue arising from the sale of
discounted-price air tickets by air-liner employer to employee).
The payment for the relocation of an employee and his
family to Hong Kong on commencement of employment or for the relocation
of an employee out of Hong Kong is not taxable.
To put it simply, the amount taxable is the amount paid by the employer in
connection with the benefit. This includes the cost of the air tickets,
hotel accommodation, traveling, food, package-tour fee... etc.
Only “holiday-journey” benefits are taxable. All
expenses in connection of business journey are exempt. Business journey
means the employee's traveling is required by his employer to perform
his duties. If a trip is substantially for business purpose, even though
part of the trip is for non-business purpose, the
whole journey will be exempt. However, if the non-business
portion is significant and can be clearly identified, the expenses
attributable to the non-business portion will be ascertained and