8/13/2019 Lecture 3. acca.

1/4

F6F6F6F6---- ECECECEC JanuaryJanuaryJanuaryJanuary- --- May 2013May 2013May 2013May 2013Lecture 3 notes

EMPLOYMENT INCOMEEMPLOYMENT INCOMEEMPLOYMENT INCOMEEMPLOYMENT INCOME

Employment in ome on!i!t! o" employee!# earnin$! %i&e& !alary' (a$e! or "ee!) plu!

t*e a!* e+ui,alent o" any ta a.le non-monetary .ene"it!&

Earnin$! are ta e/ in t*e year o" re eipt& T*ey are treate/ a! re ei,e/ in t*e earlier

o" T*e time (*en payment i! ma/e T*e time (*en t*e per!on .e ome! entitle/ to payment o" t*e earnin$!&

I" t*e employee i! /ire tor o" a ompany earnin$! "rom t*e ompany are re ei,e/ in

t*e earlier o" T*e earlier o" t*e 2 alternati,e! $i,en in t*e $eneral rule a.o,e T*e time (*en t*e amount i! re/ite/ in t*e ompany#! a ountin$ re or/! T*e en/ o" t*e ompany#! perio/ o" a ount %i" t*e amount i! /etermine/ .y

t*en) T*e time t*e amount i! /etermine/ %i" a"ter t*e en/ o" t*e ompany#! perio/

o" a ount)

Ta a.le .ene"it! are $enerally treate/ a! re ei,e/ (*en t*ey are pro,i/e/ to t*e

employee&

Net ta a.le earnin$!Net ta a.le earnin$!Net ta a.le earnin$!Net ta a.le earnin$!

T*i! i! total ta a.le earnin$! le!! total allo(a.le /e/u tion! o" a ta year&

e/u tion! annot u!ually reate a lo!! t*ey an only re/u e t*e ta a.le earnin$!

to nil&

I" t*ere i! more t*an one employment in t*e ta year' !eparate al ulation! are

re+uire/ "or ea * employment&

8/13/2019 Lecture 3. acca.

2/4

Employment an/ !el"Employment an/ !el"Employment an/ !el"Employment an/ !el" employmentemploymentemploymentemployment

Employment %re eipt! ta a.le a! earnin$!) in,ol,e! a ontra t o" o" o" o" !er,i e (*erea!

!el"-employment %re eipt! ta a.le a! tra/in$ in ome) in,ol,e! a ontra t "or "or"or"or

!er,i e!& T*e /i!tin tion .et(een t*e t(o i! /e i/e/ .y loo in$ at all t*e "a t! o" t*e

a!e&

Fa tor!' (*i * may .e o" importan e' in t*e /i!tin tion in lu/e T*e /e$ree o" ontrol e er i!e o,er t*e per!on /oin$ t*e (or 4*et*er *e mu!t a ept "urt*er (or 4*et*er t*e ot*er party mu!t pro,i/e "urt*er (or 4*et*er *e pro,i/e! *i! o(n e+uipment 4*et*er *e *ire! *i! o(n *elper! 4*at /e$ree o" "inan ial ri! ! *e ta e! 4*et*er *e an (or (*en *e *oo!e! T*e (or/in$ u!e/ in any a$reement .et(een partie! e&t& &

5llo(a.le /e/u tion! 5llo(a.le /e/u tion! 5llo(a.le /e/u tion! 5llo(a.le /e/u tion!

e/u tion! "or e pen!e! are e tremely limite/& Certain e pen/iture i! !pe i"i ally

/e/u ti.le in omputin$ net ta a.le earnin$!

a) Contri.ution! %(it*in ertain limit!) to appro,e/ o upational pen!ion

! *eme!&

.) u.! ription! to pro"e!!ional .o/ie! on t*e li!t o" .o/ie! i!!ue/ .y t*e

7e,enue' i" rele,ant to t*e /utie! o" employment&

) Payment! "or ertain lia.ilitie! relatin$ to t*e employment an/ "or in!uran e

a$ain!t t*em&

/) Payment! to *arity ma/e un/er t*e payroll /e/u tion ! *eme operate/ .y

an employer&

e) Milea$e allo(an e relie"&

8/13/2019 Lecture 3. acca.

3/4

Ot*er(i!e ot*er allo(a.le /e/u tion! are limite/ to 8uali"yin$ tra,el e pen/iture& Ot*er e pen!e! t*e employee i! o.li$e/ to in ur an/ pay a! t*e *ol/er

o" t*e employment (*i * are in urre/ (*olly' e lu!i,ely an/

ne e!!arily in t*e per"orman e o" t*e /utie! o" employment& Capital allo(an e! on plant an/ ma *inery %ot*er t*an ar! or ot*er

,e*i le!) ne e!!arily pro,i/e/ "or u!e in t*e per"orman e o" t*o!e

/utie!&

Lia.ilitie! an/ in!uran eLia.ilitie! an/ in!uran eLia.ilitie! an/ in!uran eLia.ilitie! an/ in!uran e

I" a /ire tor or employee in ur! a lia.ility relate/ to *i! employment or "or

in!uran e a$ain!t !u * a lia.ility' t*e o!t i! /e/u ti.le e pen!e& I" t*e employer

pay! !u * amount! t*ere i! no ta a.le .ene"it e&$& lia.ility "or ne$li$en e&

Tra,el e pen!e!Tra,el e pen!e!Tra,el e pen!e!Tra,el e pen!e!

Ta relie" i! not a,aila.le "or employee#! normal ommutin$ o!t! i&e& "rom *ome to

*i! pla e o" (or & 9o(e,er' employee! are entitle/ to relie" "or tra,el e pen!e!

in urre/ in tra,ellin$ in t*e per"orman e o" t*eir /utie!' or tra,elin$ to or "rom a

pla e (*i * t*ey *a,e to atten/ in t*e per"orman e o" t*eir /utie!&

tatutory Milea$e 5llo(an etatutory Milea$e 5llo(an etatutory Milea$e 5llo(an etatutory Milea$e 5llo(an e

5 !in$le aut*ori!e/ milea$e allo(an e "or .u!ine!! :ourney! in t*e employee#! o(n

,e*i le applie! to all ar! an/ ,an!& T*ere i! no in ome ta on payment! up to t*i!

allo(an e an/ employer! *a,e no o.li$ation to report it& T*i! allo(an e i! ;

8/13/2019 Lecture 3. acca.

4/4

C*arita.le /e/u tion! un/er t*e payroll e/u tion *eme&C*arita.le /e/u tion! un/er t*e payroll e/u tion *eme&C*arita.le /e/u tion! un/er t*e payroll e/u tion *eme&C*arita.le /e/u tion! un/er t*e payroll e/u tion *eme&

Employee! an ma e *arita.le /onation! un/er t*e payroll /e/u tion ! *eme .y

a! in$ t*eir employer to ma e /onation! "rom t*eir $ro!! earnin$!& u * are t*en

pa!!e/ on to a *arita.le a$en y "or re/i!tri.ution!& Ta relie" i! $i,en at !our e "or

t*e!e /e/u tion! %.e"ore omputin$ P5YE)&