Salaries tax: Holiday Journey Benefits
In Hong Kong, personal tax usually refers to salaries tax. This article provides you with an overview of Hong Kong’s salaries tax on how to handle Holiday Journey Benefits.
Taxable Holiday Journeys
Any money that your company pays for a vacation trip is taxed. The term “holiday journey” can be defined as either “a journey taken for holiday purposes” or, in the case of “where a journey is taken for holiday and other purposes, the part of the journey taken for holiday purposes”. This covers lengthy service travel awards as well as school passage allowances and associated benefits (baggage and travel expenditures).
Journeys for Both Business and Holiday Purposes
The Inland Revenue Department (IRD) will take into account the trip’s immediate purpose if it is partially taken for business and partially for vacation. The benefit won’t be taxed by the IRD if your vacation is only a side trip for business. You will be considered to have taken a holiday even if your business transaction is only incidental to your trip, such visiting a business contact en route. However, if you take a clearly identifiable portion of your trip for a holiday, the costs incurred and reimbursed by your employer for that portion of the trip must be calculated and included in your assessable income.
Distinct and Separable Business and Holiday Expenses
Should you travel for both business and pleasure and the costs associated with the vacation trip are separate and distinct (such lodging charges for additional nights spent on vacation), those costs will be deducted from your total. Your expenses will often be allocated and assessed according to the “holiday-days basis” if they are not wholly separate and separable. The entire cost of the combined trip multiplied by the number of vacation days will be split by the total number of days involved in the trip.
For other special cases related to Holiday Journey Benefits, you can visit IRD’s website to learn more.
