For decision
on
CONFIDENTIAL
Draft
MEMORANDUM FOR EXECUTIVE COUNCIL
XCC
Copy No.
PUBLIC SERVICE : LIMITED COMPENSATION SCHEME
GROSSING UP OF COMPENSATION FOR TAX PURPOSES
FOR OFFICERS SUPERSEDED FOR PROMOTION
THE PROBLEM
It
was
the
original intention that all
compensation payments under the Limited Compensation Scheme
(LCS) should be tax free.
However, under existing tax
legislation such compensation payments will be exempt only
officer is directed to retire. Compensation
where the
payments to
officers who are superseded for promotion will
be taxed in full. It is therefore necessary to gross-up
compensation factors to cover tax liability for officers
superseded for promotion to facilitate localisation.
CONFIDENTIAL