TNAG-1449-FCO40-1953-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1986 — Page 271

(b)

Where an employer makes arrangements for his employee to be provided with medical services and those services are paid for directly by the employer no liability to Salaries Tax will arise. This benefit is one which is not convertible into cash. On the other hand where an employer gives a cash reimbursement to his employee for medical expenses already paid or where an employer discharges a libility for medical expenses incurred by the employee this is regarded as a benefit received in or convertible into cash which is chargeable to Salaries Tax in the hands of the employee.

Passage and baggage allowances have been expressly excluded from the charge to Salaries Tax ever since 1947. The reason for this exclusion, when first introduced, appears to have been to assist Hong Kong businesses to offer terms and conditions likely to attract and retain the overseas staff necessary for the development of new business methods and techniques. Of course, in recent times there has been a growing tendency for locally recruited staff to be also given passage allowances to take leave outside

Hong Kong.

Consequently, in Hong Kong the inclusion of a tax-free passage allowance in the overall salary

package has become so well established that I am most hesitant to disturb the existing situation. So far as money devoted to the provision of medical benefits is concerned I appreciate that a case can be made for excluding such benefits from the charge to tax. At the same time I think it must be recognized that to select now one type of benefit for exemption, such as medical benefits, would create a difference in treatment under the

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