This is an undoubtedly a taxable benefit. The only doubt here is how to compute the quantum of taxable benefit.
Benefit is applicable to employees. Not applicable to directors who are employees too.
What is the Rule?
The taxable value of the accommodation is the lower of:-
- 10% of the gains or profits from employment LESS any rent paid by the employee; OR;
- the annual value of the premises.
Annual value – $38,000
Rent paid by employee – $700 x 12 months = $8,400
Remuneration from employment – $150,000
Which of the following presentation is correct?
- (10% x $150,000) = $15,000 or
The lower amount being $15,000 ==> taxable benefit would be $15,000 less $8,400 = $6,600.
- (10% x $150,000) less $8,400 = $6,600 OR;
Thus the taxable benefit would be $6,600.
Which do you think is the correct presentation though both give you the same answer?