F6F6- EC JanuaryJanuary- May 2013 Lecture 3 notes EMPLOYMENT 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$! T*i! i! total ta-a.le earnin$! le!! total allo(a.le /e/u tion! o" a ta- year& 0e/u tion! annot u!ually reate a lo!!1 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&

Employment an/ !el" 2employment Employment %re eipt! ta-a.le a! earnin$!) in,ol,e! a ontra t o" !er,i e (*erea! !el"-employment %re eipt! ta-a.le a! tra/in$ in ome) in,ol,e! a ontra t "or

!er,i e!& T*e /i!tin tion .et(een t*e t(o i! /e i/e/ .y loo3in$ 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/e1 T*e /e$ree o" ontrol e-er i!e o,er t*e per!on /oin$ t*e (or3 4*et*er *e mu!t a ept "urt*er (or3 4*et*er t*e ot*er party mu!t pro,i/e "urt*er (or3 4*et*er *e pro,i/e! *i! o(n e+uipment 4*et*er *e *ire! *i! o(n *elper! 4*at /e$ree o" "inan ial ri!3! *e ta3e! 4*et*er *e an (or3 (*en *e *oo!e! T*e (or/in$ u!e/ in any a$reement .et(een partie! e&t& &

5llo(a.le /e/u tion! 0e/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$! a) Contri.ution! %(it*in ! *eme!& .) 6u.! ription! to pro"e!!ional .o/ie! on t*e li!t o" .o/ie! i!!ue/ .y t*e 7e,enue' i" rele,ant to t*e /utie! o" employment& ) Payment! "or ertain lia.ilitie! relatin$ 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"& ertain limit!) to appro,e/ o upational pen!ion

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 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! Ta- relie" i! not a,aila.le "or employee#! normal ommutin$ o!t! i&e& "rom *ome to *i! pla e o" (or3& 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!& 6tatutory 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! ;<p per mile on t*e "ire! 10'000 mile! in t*e ta- year (it* a//itional mile o,er 10'000 mile! at 2<p per mile& For employee! u!in$ t*eir o(n motor y le' t*e allo(an e i! 2;p per mile& I" on a pe/al y le' t*e allo(an e i! 20p per mile& I" employer! pay le!! t*an t*e !tatutory milea$e allo(an e' employee! an laim ta- relie" up to t*at le,el&

C*arita.le /e/u tion! un/er t*e payroll 0e/u tion 6 *eme& Employee! an ma3e *arita.le /onation! un/er t*e payroll /e/u tion ! *eme .y a!3in$ t*eir employer to ma3e /onation! "rom t*eir $ro!! earnin$!& 6u * 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)&