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empoyer provided meals are taxable

JONATHAN HORE

Some employers have arrangements where they provide their employees with free or subsidised meals. Such arrangements may be done for various reasons such as considering the remoteness of the workstation especially for some mines or improvement of staff welfare.

I want to show you that such meal arrangements may result in PAYE in the hands of the employees. These meals are taxed as free benefits as there is no cash involved but the employees enjoy a benefit. For the avoidance of doubt, the tax we will discuss today is PAYE or employees’ tax as the benefit arises from an employer-employee arrangement. In this article, words importing the masculine shall be deemed to include the feminine.

FREE BENEFITS

The Income Tax Act brings to tax any employer-provided free benefits enjoyed by employees. The tax is payable by the employees but is supposed to be deducted by the employer. For the record, whenever an employee enjoys an ‘advantage’ or ‘free benefit’ from a facility provided by an employer, that employee is potentially taxable. I must also state that free benefits are non-monetary items availed to employees which result in the employees enjoying an advantage that they would not otherwise enjoy had it not been availed by the employer. It is critical to reiterate that there is always no money which is directly paid to employees when a benefit arises. The employee however enjoys an advantage over any other employee who does not get to enjoy that facility, which is the reason why PAYE arises.

MEAL BENEFIT TAXABLE

Before I continue with taxation of meal benefits, I must state that a ‘meal allowance’ is not, by a BURS’ concession, taxable. Such ‘allowances’ are usually provided to employees when they are out of town or their workstation. What must be clear is that a ‘meal allowance’ is a monetary payment that is given to an employee for them to have a meal whilst a ‘meal benefit’ is not money but an arrangement where an employee gets to have a meal provided by an employer. Therefore, these two are different, albeit close to each other.

Below are some of the arrangements where meal benefits are taxable:

Free meals: An employee is taxable when the employer provides him with a free meal. The benefit taxable in the hands of the employee is equivalent to the market value of such a meal. In other words, the employee is taxed using the value of the meal that would otherwise be charged if such meal was to be provided to a third party. The benefit arising from the meal benefit is added to that employee’s salary and then tax is applied.

Subsidised meals: It may also happen that employers provide employees with meals but at subsidized prices. For example, if a meal costs P40 and employees are allowed to pay P15 per that meal, then the benefit will be P25 per meal for each employee who enjoys that meal.
Meal vouchers: Sometimes, employers provide their employees with meal vouchers which they redeem by getting meals and such meals are taxable. The fact that the employee enjoys the meal provided by the employer makes the benefit taxable. I must point out that it does not matter whether the meal vouchers are redeemed at the employer’s facilities or at third party’s facilities; PAYE still arises.

CONCLUSION

The biggest challenge with this benefit is the implementation part as it is not always easy to determine who had a meal and when. However, the truth of the matter is that if employers want to monitor the benefit enjoyed, they certainly can. It will be administratively burdensome but not something that cannot be done. The other issue to note is that non-deduction of the tax makes employers personally liable for the PAYE, before a possible 200% penalty that BURS may charge.

Where employers intend to avoid passing the tax to employees, they may consider grossing-up the benefit, essentially bearing the tax themselves. However, it must be noted that grossing-up may even make compliance with this tax more complex than just subjecting the benefit to tax. Lastly, I must reiterate, as stated above, that meal benefits enjoyed by employees when they are out of office are not taxable.

The reason for that exception is that the benefit is enjoyed in advancing the employer’s business. The taxable benefits stated above are ones that arise when employees are, in most cases, at their normal workstations. 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 is the Managing Tax Consultant of Aupracon Tax Specialists and feedback can be relayed to 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 Zones: How to Get SEZA to Sizzle

23rd September 2020
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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Egypt Bagged Again

23rd September 2020
Samson

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

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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