Uniform and laundry allowances, with the exception of those that conform to Appendix B, Regulation 12 of the Income Tax Act, are taxable "in full" with effect from August 1, the Tax Administration Services Department (TASD) is reminding employers.

The list of 24 groups under Regulation 12 runs the gamut from police and security officials to judges, from cleaners to doctors, as well as port workers, aircraft and ship crew and "workers employed in the hospitality or manufacturing industry, restaurants, agriculture, mining or in refrigerated facilities".

Exempt allowances

The exempt allowances remain capped at $5,739 for uniforms and $3,395 for laundry.

"Any amount in excess of the exemption is to be taxed," said the TASD in a statement Tuesday.

Housing allowance is also taxable at 25 per cent, whether companies pay rent to a landlord on behalf of their employees or the allowance is remitted directly to employees, or whether the company provides accommodation to persons on its payroll.

"In the event that an employee is provided with accommodation that is owned or rented by the employer, the value of the accommodation shall be deemed to be the market value and taxed accordingly," TASD said.

The exception to this is if the employee is provided with housing on the "same premises as the place of employment" or where the location can be shown to be integral to the person's job function.

Here the employee is taxed at a rate up to 30 per cent, but the rate excludes the allowance, TASD said.

Citing, the tax department's example, if an employee earns $140,000 of which $40,000 is in the form of an housing allowance, the tax rate will be applied to the $100,000 salary only.

The same applies to employee-occupied premises of any body exempt from Income Tax under Section 12(h) of the law, which covers religious, charitable, scientific, or educational organisations that are not operated for the benefit of private shareholders.

business@gleanerjm.com