WEDNESDAY, MARCH 12, 1986
14
EMPLOYEE MEDICAL BENEFITS TO BE REVIEWED
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THE COMMISSIONER OF INLAND REVENUE WOULD CONDUCT A REVIEW INTO THE SCOPE OF AND THE FORM IN WHICH EMPLOYEE MEDICAL BENEFITS WERE CURRENTLY BEING PROVIDED, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
WHEN THAT REVIEW HAD BEEN COMPLETED, CONSIDERATION WOULD BE GIVEN WHETHER TO RECOMMEND THAT THE LAW BE AMENDED TO EXEMPT ALL SUCH BENEFITS FROM SALARIES TAX, HE SAID.
IN A WRITTEN REPLY TO A QUESTION BY THE HON RITA FAN, SIR JOHN SAID THAT SO FAR AS MONEY DEVOTED TO THE PROVISION OF MEDICAL BENEFITS WAS CONCERNED, A CASE COULD BE MADE FOR EXCLUDING SUCH BENEFITS FROM THE CHARGE TO TAX.
AT THE SAME TIME, HE SAID, IT MUST BE RECOGNISED THAT TO SELECT NOW ONE TYPE OF BENEFIT FOR EXEMPTION, SUCH AS MEDICAL BENEFITS, WOULD CREATE A DIFFERENCE IN TREATMENT UNDER THE LAW BETWEEN AN EMPLOYEE WHO WAS PROVIDED WITH SUCH A TAX-FREE BENEFIT AND ANOTHER WHO WAS NOT BUT WHO RECEIVED SOME OTHER BENEFIT OF EQUAL VALUE AND WAS CHARGED TO TAX ON ITS VALUE.
SIR JOHN SAID THAT IN PRINCIPLE AN EMPLOYEE SHOULD BE LIABLE TO SALARIES TAX NOT ONLY ON HIS MONTHLY CASH REMUNERATION BUT ALSO ON ANY FRINGE BENEFITS HE RECEIVED FROM HIS EMPLOYER.
HOWEVER, THE ADMINISTRATIVE DIFFICULTIES IN ATTEMPTING TO PUT A VALUE ON EVERY BENEFIT RECEIVED BY EMPLOYEES WOULD FAR OUTWEIGH THE EXTRA BENEFIT TO BE OBTAINED FROM ASSESSING SUCH BENEFITS TO TAX, HE SAID.
AGAINST THIS BACKGROUND THE GOVERNMENT HAD FOR MANY YEARS FOLLOWED THE PRINCIPLE ESTABLISHED IN THE UK OF TAXING ONLY THOSE EMPLOYEE BENEFITS WHICH WERE RECEIVED IN OR WERE CONVERTIBLE INTO CASH, HE SAID.
+THIS POLICY IS APPLICABLE TO MEDICAL BENEFITS PROVIDED TO EMPLOYEES BY THE IR EMPLOYER,+ HE SAID.
SIR JOHN SAID THAT WHERE THOSE MEDICAL SERVICES WERE PAID FOR DIRECTLY BY THE EMPLOYER NO LIABILITY TO SALARIES TAX WOULD ARISE, THIS BENEFIT WAS ONE WHICH WAS NOT CONVERTIBLE INTO CASH.
ON THE OTHER HAND, HE SAID, WHERE AN EMPLOYER GAVE A CASH REIMBURSEMENT TO HIS EMPLOYEE FOR MEDICAL EXPENSES ALREADY PAID OR WHERE AN EMPLOYER DISCHARGED A LIABILITY FOR MEDICAL EXPENSES INCURRED BY THE EMPLOYEE THIS WAS REGARDED AS A BENEFIT RECEIVED IN OR CONVERTIBLE INTO CASH WHICH WAS CHARGEABLE TO SALARIES TAX IN THE HANDS OF THE EMPLOYEE.
/ON THE