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School fees benefit triggers employees’ tax

JONATHAN HORE

Last week, I wrote about the tax that is triggered by interest-free loans or loans advanced by employers to employees at low interest rates. I also stated that the employees are taxed primarily because they would have enjoyed an advantage, which arises due to the employer-employee relationship they have with their employers.

I also mentioned that the benefit is then added to the salary and tax is determined on the total remuneration earned. I want to discuss how different school fees arrangements also trigger tax in today’s article. As usual, words importing the masculine shall be deemed to include the feminine.

WHAT TAX IS THIS?

Before I expand on how exactly the school fees may trigger tax, it is important to first expand on what sort of tax we are talking about today. Whenever we talk of employer-employee relationships, the tax that arises in such scenarios is called Pay As You Earn (PAYE) or employees’ tax. This is a tax that an employer deducts from both monetary and non-monetary remuneration earned by employees.

Notice that monetary remuneration is real money paid to employees whilst non-monetary remuneration is what is alternatively called free benefits, fringe benefits, benefits-in-kind or advantages. In such instances, the employees do not receive money but enjoy an advantage due to an arrangement put in place by an employer.

HOW TAX & SCHOOL FEES MIX

The following are the different school fees arrangements that are common and how they trigger tax:

Fees paid to school: The most common arrangement regarding school fees is one where employers cater for employees’ school fee bills, which they pay directly to the school. What this means is that the employees are relieved of paying fees for their children, which certainly results in a taxable benefit. The benefit that is taxed in the employees’ hands is the equivalence of the amount paid by the employer to the school. For example, if an employee earns a salary of P 40 000 and his employer pays fees of P25 000 for the whole year in a particular month, that employee is taxed on P 65 000 in that month;

Transportation: Some employers also cater for the flights or transportation costs of their employees’ children. Such passage benefit is taxed as the employees would have enjoyed an advantage. However, there is a section in the Income Tax Act which exempts a passage benefit from tax in case it is contractual. In other words, as long as the passage benefit is included in employees’ contracts, no tax arises. If this tickles you, you may need professional advice to get it right;

School fee discounts: Some employers, especially educational institutions such as universities, colleges and schools allow their employees and their employees’ children to access educational services at such institutions either for free or at subsidized rates. Such arrangements certainly trigger tax in the sense that the employees enjoy a benefit that they would otherwise not have if they were not employed by their employers. The tax is determined on the difference between what any other students pays and what the employees’ children pay. For example, if school fees per term is P 12 000 and an employee’s child pays P 2 000, then the employee enjoys a benefit of P10 000, which must be taxed.

Refunds: Some employers allow employees to embark on a course of their choice, after which the employees get a refund from the employer upon successful completion of the course. If the courses are for the benefit of the employees, i.e. not mandatory for the employees to take the course in order for them to perform better at work, then the employees will be deriving a private benefit.

Further, most employees who get trained by employers are bonded for some period and that is a sign that the training was not necessarily for the sole benefit of the employees but also for the employer. In the latter case, there is usually no taxable benefit as such courses are initiated and highly regulated by the employer. Tax arises in cases where the courses are optional and not embarked on to further the employer’s business.

THE END OF THE MATTER

To wrap up, let me state that it is not possible to enumerate all the school fees arrangements that employers may have in place for employees. However, all that needs to be kept in mind is that the employees are supposed to be taxed on the benefit they enjoy from any such arrangements. Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below.

Jonathan Hore writes on behalf of Aupracon Tax Specialists and feedback can be relayed to  HYPERLINK "mailto:jhore@aupracontax.co.bw" jhore@aupracontax.co.bw or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

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Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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‘RO, ‘RO ‘RO YOUR ‘BOT

23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site www.willrobotstakemyjob.com    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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