paye and benefits draft outline feb 08 2012- rev

8/3/2019 PAYE and Benefits Draft Outline Feb 08 2012- Rev

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Government of Antigua and Barbuda

Inland Revenue Department

Personal Income Tax

PAYE, Employee and Shareholder Benefits andAllowances (2012) Guide

Commissioner Inland Revenue Department Date: February 8, 2012


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Table of Contents

I. Application - Who Should Use This Guide?...................................................................4II. Introduction ...................................................................................................................4III. General Information and Your Responsibilities ..........................................................5

General Information.......................................................................................................5Duties and Obligations of the Employer ................................................................................5

Determine if the benefit is taxable..................................................................................7Calculate the value of the benefit ...................................................................................7Include the ABST ..........................................................................................................8Calculate payroll deductions ..........................................................................................8

IV. The PAYE System Defined........................................................................................8V. What are Exemptions to PAYE? ....................................................................................9VI. Explanatory Notes for Exemptions ........................................................................... 10

Board and lodging allowances paid to players on sports teams ..................................... 10Child care expenses ..................................................................................................... 10Counseling services ..................................................................................................... 10Disability-related employment benefits ........................................................................ 10Health services plan premiums .................................................................................... 11Moving expenses and relocation benefits ..................................................................... 11Reimbursement or advance for travel and other expenses............................................. 11Subsidized meals ......................................................................................................... 12Overtime meal allowances ........................................................................................... 12Tuition fees, scholarships, and bursaries ...................................................................... 12Uniforms and special clothing...................................................................................... 13

VII. Employment Income Subject to PAYE .................................................................... 13VIII. Foreign Payments Emoluments Subject to PAYE .................................................... 14IX. ABST Treatment of Employee and Shareholder Benefits ......................................... 14

Employee benefits ....................................................................................................... 14Situations where the employer is not considered to have collected ABST .................... 15When is an employer considered to have collected ABST? .......................................... 15How to calculate the amount of ABST ......................................................................... 15Summary ..................................................................................................................... 15Non-registrants ............................................................................................................ 16

X. Amounts to Be Included in Income .............................................................................. 16A. Automobile Benefits and Allowances ...................................................................... 16

Definitions ................................................................................................................... 16Calculating a benefit to employee for use of employer owned automobiles .................. 17Automobile allowances ................................................................................................ 18Flat-rate allowance ...................................................................................................... 18Reasonable per mile/per-kilometer allowance .............................................................. 19

B. Other Benefits and Allowances ................................................................................ 20Aircraft and Boats ........................................................................................................ 20Housing Allowances .................................................................................................... 20Bonuses ....................................................................................................................... 20Commissions ............................................................................................................... 21Loan forgiveness and write-offs ................................................................................... 21


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Credit Cards ................................................................................................................ 21Directors Fees/Board Fees .......................................................................................... 21Discounts on services and merchandise and commissions on sales ............................... 21Employer-Paid Educational Costs ................................................................................ 22Educational allowances for children ............................................................................. 22Entertainment .............................................................................................................. 22

Group life insurance policies - Employer-paid premiums ............................................. 22Holiday Trips and Incentive Awards ............................................................................ 23Payment for Personal Household Services ................................................................... 23Accommodation Provided by Employer ....................................................................... 24Legal Fees ................................................................................................................... 24Loans - interest-free and low-interest ........................................................................... 24Loans received because of employment ....................................................................... 25Redundancy, Lump sum, honorarium, and ex-gratia payments ..................................... 26Premiums under Hospitalization and Medical Care Insurance Plans ............................. 27Professional Membership Fees ..................................................................................... 27Recreational facilities and club dues ............................................................................ 28

Retirement allowance .................................................................................................. 28Salary deferral arrangements ........................................................................................ 29Securities, Shares and Stock Options ........................................................................... 29Shareholders Benefits and Allowances......................................................................... 29Spouse or common-law partner's travelling expenses ................................................... 30Subsistence Allowance ................................................................................................ 30Transportation passes and assistance benefits ............................................................... 31Utilities provided by the employer ............................................................................... 31Wage Loss Replacement Plans .................................................................................... 31

XI. Restructuring of Remuneration Package................................................................... 31XII. Players, Administrators, and Executives Employed by Sporting Clubs ..................... 32XIII. Defense Force Allowances ....................................................................................... 33XIV. Police Force Allowances .......................................................................................... 33XV. Fire Brigade Allowances .......................................................................................... 33Appendix I: Definitions and Interpretation ...................................................................... 34Appendix II: Employee or Self-Employed Worker! ....................................................... 36Appendix III: Determining a Workers Employment Status ............................................ 36Appendix IV: Special Situation ....................................................................................... 36

Placement or Employment Agency Worker ................................................................. 36Agency that Hires the Employee .................................................................................. 36Agency that Pays the Worker ....................................................................................... 37Agency whose client pays the Worker ......................................................................... 37Agency that Hires a Worker under a Contract for Service ............................................ 37

Appendix V: Calculating Auto Benefit Form for (2012) ................................................ 38Appendix VI: Determining a Workers Employment Status 40


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I. APPLICATION -WHO SHOULD USE THIS GUIDE?

This Taxpayer Guide provides useful information for employers and employees. Use thisguide if you are an employer; a trustee; or a payer of other amounts (e.g. a trustee in

bankruptcy) or if you pay employees any of the following types of income, such as:

employment income fees allowances and benefits; any other payments for services rendered during the year

For information on calculating payroll deductions see tax deduction tables and F47 PAYEMonthly Remittance Installment Guide (2011) for Employers.

For information on filing an annual return, see F48 PAYE Annual Reconciliation Return

(2011) Guide to completion.

A benefit or allowance can be paid to employees in cash (such as an auto allowance) orprovided in a manner other than cash (such as a gift, transportation or housing).

The employer may have to include the value of a benefit or allowance in an employeesincome, depending on the type and purpose of the benefit or allowance.

This guide explains the employers responsibilities and indicates how to calculate the valueof benefits and or allowances.

Is this guide for you?

II. INTRODUCTION

All employers are required to withhold and remit income tax from amounts paid toemployees under the Personal Income Tax Act, 2005 (amended). This publication isintended to clearly define those items that should be included in employment income and

subjected to income tax withholdings. This Guide will also assist employers in quantifyingthe amount of the benefit.

An employer who withholds an amount from an employee is considered to hold theamount separate and apart from the property of the employer in trust for theCommissioner and for payment to the Commissioner in the manner and at the timeprovided under the Act. Put simply, PAYE deductions made from the salaries and wagesof employees should be kept in a separate account, and not used for the day to day


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operation of the business.

IRD will administer the current Act as including emoluments in the calculation of grossearnings for income tax purposes. This change in IRD administrative policy will commence

on March 1, 2012.

There are compelling legal requirements for employers to make statutory deductions fromemoluments. In order to comply, those involved must have a good understanding of all of thefactors involved in this exercise.

The operation of the Pay as You Earn (PAYE) system is based on the Personal Income TaxAct 2005 (amended).

The guide provides detailed information about a number of special subjects that fall withinPAYE, and on the basic operation of the PAYE system. Should you have doubts about any

aspect of the PAYE System, contact the Inland Revenue Department, Taxpayer ServicesOfficer for clarification.

III. GENERAL INFORMATION AND YOUR RESPONSIBILITIES

General Information

What is an employer?

An employer/employee relationship exists where a person or entity has the right to controland direct the person or people who perform services or if there is any arrangement, whetherformal or informal or any other means, for the establishment of an employer-employeerelationship. See Appendix VI on Page 42 of this Guide.

Employers must: deduct income tax from amounts paid to employees; remit these deductions on the employees' behalf to IRD.

DUTIES AND OBLIGATIONS OF THE EMPLOYER

Under the Personal Income Tax Act, the employer has thefollowing responsibilities:

1. To apply to the Inland Revenue for a Tax Identification NumberEvery person who is or becomes an employer is required to registerwith the Commissionerof Inland Revenue and obtain a TaxIdentification Number.


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If a person becomes an employer at any time then the person is required to register notlater than fifteen days after becoming an employer.

To obtain a Tax Identification Number the employer must completeeither Form F14

"Individual Enterprise Registration" in case of anindividual or Form F15 "Non-IndividualEnterprise Registration" in the case of a corporation or partnership and submit it to theInlandRevenue Department.

2. To withhold tax from employees' emolumentsEach time the employer makes a payment to an employee theemployer must deductthe appropriate amount of tax in accordancewith the Tax Deduction Tables supplied bythe Inland RevenueDepartment.

Employers may accept an instruction from employees to increase the amount of tax

withheld from their income. However, employersmust not

accept any instructionsfrom employees to reduce or ceasethe withholding of tax from their income.

3. To remit tax withheld from employees to the Inland Revenue DepartmentEmployers will remit tax withheld by filing their F47 Pay as You Earn - MonthlyRemittance form along with the F47A List of Employees. The forms can be collectedfrom the Inland Revenue Department or be downloaded at www.antigua.gov.ag.

The employer is required to remit the tax withheld to the Inland Revenue Departmenton the employee's behalf. The payment must be accompanied by a F47 Pay as YouEarn - Monthly Remittanceform along with the F47A List of Employees and submittednot later than 15 days after the last day of eachmonth for which the deduction was made.

If the 15th

day of the month falls on a Saturday, Sundayor statutory holiday, then thepayment must be effected by the nextbusiness day.

4. To provide employees with a record of payments and deductionsAn employer is also required to provide each employee, whether or not tax has beenwithheld from the employee's income,with the following documents:

a) at the time of payment a record showing:

i. the amount of employment income;ii. the amount of allowances and benefits iii. the amount of tax, if any, withheld from the employee's income in respect of the

previous month; and

b) not later than the 15th

February in each year or 21 daysafter ceasing to be the employerof a particular employee, an F55 - Statement of Remuneration paid and tax deducted withrespect to theprevious income year showing:


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i. the amount of employment income;ii. the amount of allowances and benefits

iii. the amount of tax withheld during the income year to which theemployment relates.

5. To maintain recordsEvery employer is required in respect of each of employee, tomaintain a record showingin relation to each month and incomeyear:

(a) the name and Tax Identification Number of the employee; (b)the allowances and benefits accrued to the employee;(c) the employment income accrued to the employee; and(d)the amount of tax withheld from the emoluments of the employee.

An employer is required to retain the records relating to eachemployee for a period ofseven years from the date on which the person first became an employee

6. To complete an Annual ReturnAn employer is required to complete and file with the Inland Revenue Department, aF48 Pay as You Earn Annual Declaration not later than the 15th of February in eachyear in respect of thepreceding income year. This return will be a reconciliation of allpayments and reporting information contained in the F47 Pay as You Earn MonthlyReturn forms filed throughout the year.

Determine if the benefit is taxable

The first step is to determine whether the benefit provided to an employee is taxable and hasto be included in his or her employment income. A benefit is personal in nature and caninclude:

a reimbursement of personal expenses; free use of property, goods, or services owned by the employer; or an allowance.

When an employee receives a benefit as well as salary and wages, the value of the benefitmust be included in the employees income. Whether or not the benefit is taxable depends onits type and the reason an employee or officer receives it.

The benefit may be paid in cash (such as a meal allowance) or provided in a manner otherthan cash (a non-cash benefit), such as a gift. To determine if the benefit is taxable, seeSection XIV.

Calculate the value of the benefit

Once the benefit is determined to be taxable, to the employer must calculate its value.


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The value of a benefit is generally its fair market value (FMV). This is the price that can beobtained in an open market between two individuals dealing at arms length. The cost to theemployer for the particular property, goods, or service may be used if it reflects the FMV ofthe item or service.

The employer must be able to support the value if asked by to do so by IRD.

Include the ABST

When the employer calculates the value of a taxable benefit an amount must be included forthe ABST. The benefit should include the ABST payable by the employer, as well as the taxthat would have been payable if the employer were not exempt from paying the tax becauseof the nature of the use of the property or service.

The amount of the ABST included in the value of taxable benefits is based on the grossamount of the benefits, before subtracting any amounts the employee might have reimbursed.

The employer does not have to include the ABST for:

cash remuneration (such as salary, wages, and allowances); or a taxable benefit that is an exempt supply or a zero-rated supplyas defined in the

ABST Law.

For more information on how the ABST applies to a specific benefit or allowance seeSection VIII.

Employers who are ABST registrants may have to remit ABST for the taxable benefitsprovided to employees. For more information, see Section VIII.

Calculate payroll deductions

After calculating the value of a benefit and including the ABST that may apply, this amountshould be added to the employees income for each pay period or when the benefit isreceived or enjoyed. This gives the total amount of income subject to payroll deductions. Theemployer must then withhold the deductions from the employees total pay in the pay period in the normal manner.

IV. THE PAYESYSTEM DEFINED

PAYE (Pay asYou Earn) is the system used to calculate and collect Personal Income Taxand other statutory deductions from payments made to employees.


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PAYE applies to all fulltime employees, temporary and casual workers, contract workers,directors, shareholders and pensioners. All persons in receipt of an income are entitled to apersonal allowance, which is exempt from the payment of Personal Income Tax. ThePersonal Income Tax Act No. 1 of 2005 provides the following definition: personalallowance means the amount of income not liable to tax as provided in the Schedule;

Based on this schedule, employed persons in receipt of gross income not exceeding$3,000 monthly or $36,000 per year, and pensioners whose gross earnings do not exceed$5,000 monthly or $60,000 per year, are exempt from the payment of Personal IncomeTax.

V. WHAT ARE EXEMPTIONS TO PAYE?

List of items not included in emoluments (exempt income):

a) salaries paid to members of the consular services of foreign countries;b) gratuities granted to persons upon expiration of a fixed period contract of service

not exceeding 12.5% of total income;c) employers contribution to pension plans and thrift funds not exceeding 5% of

total income;d) employers contribution to group life and group medical insurance plans, where

the benefit is available to all employees;e) capital sums withdrawn by individuals on retirement;f)

income arising from a scholarship;g) income arising from the business of shipping or air transport for non-residents ofAntigua and Barbuda, where a reciprocal arrangement is in place with their homecountries;

h) interest on savings, capital gains and dividends;i) saving realized from low-interest or interest free loans from employers, on loans

not exceeding $10,000;j) savings realized on loans of any amount granted by employers to their employees

to purchase residential lands, construct an owner occupied residence, pay medicalor educational expenses or purchase a motor vehicle;

k) interest saving realized on any loan, granted for any purpose by financialinstitutions (commercial banks, credit unions, mortgage companies and insurancecompanies) to their employees;

l) a benefit, other than the income to which paragraph (h) applies under the SocialSecurity Act;

m) the first $3,000 of monthly income or $36,000 per year.n) in addition to the standard exemption, mentioned above, persons in receipt of a

pension, other similar benefit or other terminal benefit are entitled to an additionalpersonal allowance, not exceeding $2,000 per month or $24,000 per year;


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o) income arising from any agreement to which the Government is a party is exemptfrom the tax; and

p) tips and service charges received by an individual engaged in the hospitalityindustry other than an individual in a management position.

q) Housing and travel allowances, subject to the maximum exemptions set out in thisguide;r) Medical expenses reimbursed by employers, which must be supported by receiptsand or invoices from the medical practitioner or hospital.

s) Child care expenses

VI. EXPLANATORY NOTES FOR EXEMPTIONS

Board and lodging allowances paid to players on sports teams

Exclude board and lodging allowance from income for a participant or member or otherofficial of a sports team or recreational program if allthe following conditions are met:

You are a registered charity or a non-profit organization. The allowance is for board and lodging for members, and/or players that have to live

away from their ordinary place of residence. The allowance is not attributable to any services, such as coaching, refereeing, or

other services to the team or program.

Child care expenses

Child care is not taxable if the services are provided to all employees at little or no cost. Thiswould apply whether or not:

The services are provided at the place of business or The services are managed directly by the employer.

Counseling services

Payments for services such as financial counseling or income tax preparation for anemployee are usually considered a taxable benefit.

Employee counseling services are not taxable if they are for one of the following: an employees re-employment; an employees retirement; or an employees mental or physical health (such as counseling for tobacco, drug, or

alcohol abuse, stress management or employee assistance programs) or that of aperson related to an employee.

Disability-related employment benefits

Benefits provided to an employee with a disability are generally not taxable.


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Reasonable transportation costs between an employees home and work location (includingparking near that location) are not taxable if they are paid for an employee who:

is legally blind; or has a severe and prolonged mobility impairment, which markedly restricts the

individuals ability to perform a basic activity of daily living.

These transportation costs can include an allowance for taxis or specially designed publictransit and parking.

Reasonable benefits for attendants to help employees with severe and prolonged mental orphysical impairments perform their duties are not taxable for the employee. The benefits caninclude readers for persons who are blind, signers for persons who are deaf, and coaches forpersons who are intellectually impaired.

Health services plan premiums

Contributions to private health service plans (such as medical or dental plans) for allemployees are not taxed. Contributions for select employees are a fringe benefit and theamount of the premium is taxable.

Moving expenses and relocation benefits

Reimbursement of reasonable relocation expenses is not considered a taxable benefit to theemployee. This would occur where an employer reimburses an employee for the expensesincurred in moving the employee and the employee's family and household effects becausethe employee has been transferred from one establishment of the employer to another, orbecause an employee accepts a job at a place away from his/her home.

Reimbursement or advance for travel and other expenses

A reimbursement is a payment made to employees for amounts spent while conducting theemployers business. Generally, the employee completes a claim or expense report detailingthe amounts spent. This is not a taxable benefit; it becomes part of the employers businessexpenses.

An advance is an amount given to employees for expenses they will incur while conductingthe employers business. They will account for their expenses by producing vouchers and

return any amount they did not spend.

A reimbursement or an accountable advance for travel expenses is not income for theemployee unless it represents payment of the employee's personal expenses.


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Uniforms and special clothing

Employees do not receive a taxable benefit when:

they are supplied with a distinctive uniform they have to wear while they carry outtheir employment duties; or

they are provided with special clothing (including safety footwear) designed toprotect them from hazards associated with the employment.Accountable allowances (where receipts are required) to employees to buy uniforms orprotective clothing, are a reimbursement of expenses and not a taxable benefit.

VII. EMPLOYMENT INCOME SUBJECT TO PAYE

The following is an indication of the items that should be included in employment income forpurposes of calculating PAYEGroup #1

Housing and travel allowances that exceed the cap established in this guide; All pensions or other payments made in respect of past services in any office or

employment of profit, over and above the exemptions applicable to pensioners.

Any payment (other than severance) made as a result of a post being maderedundant.

Basic wage or salary Bonus payments Cash allowances Commissions Fees Gratuities (other than tips received in the hospitality industry but excluding those

in management positions)

Honoraria Overtime pay Duty allowance Production bonus

Group #2

Allowances (other than an allowance which is wholly and exclusively used in theproduction of the employers assessable income)

Amounts paid to directors, shareholders and business owners for their domesticprivate expenses (vacation travel, utilities, groceries etc.)

Any employees liabilities (including tax) paid on his behalf by the employer Loan forgiveness and write-offs Personal expenses incurred by an employee, which are charged to a corporate

credit/debit card, and paid by the employer


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Shares / Equity / Securities Options Utilities and other benefits of employment in money, kind or otherwise,

Group #3

Value of private use of motor cars given/provided to employees Value of private use of aircraft and/or boats given/provided to employees

The term employment income has also been extended to include payments made under acontract or arrangement where:

One person is under obligation to render personal services to another whether onhis/her own behalf; or on behalf of a company, and

Where the person mentioned above is subject to supervision, direction or controlby the other person as to the manner in which he renders those services and theremuneration for the services would not, except for these provisions, be treated asemoluments.

VIII. FOREIGN PAYMENTS EMOLUMENTS SUBJECT TO PAYE

Where the foreign or home base salary paid to expatriates or other employees has anyconnection or nexus with work performed or service provided in Antigua and Barbuda, theamount paid overseas shall be included as a taxable benefit in Antigua and Barbuda. In thiscontext, even if the payment of salary is made by a foreign employer to an expatriateemployee or employee outside Antigua and Barbuda and in foreign currency, the salary paidwould be liable for Antigua and Barbuda tax.

All Antigua and Barbuda entities are to deduct tax at source from the salary/allowances paidby them to expatriate and other employees and from the salary/allowances paid abroad by

Antigua and Barbuda entities and related and associated foreign employers, provided that theemployee worked or rendered services in Antigua and Barbuda during the period in question.

In summary, the Antigua and Barbuda entity tax deductor/employer is duty bound todeduct tax at source from the total salary, benefits and allowances (subject to any exemptionsdetailed in this Guide) paid in Antigua and Barbuda and/or overseas by the related andassociated company, when no work was performed for the related and associated foreigncompany and the total remuneration was paid on account of services rendered in Antigua andBarbuda during the tax period in question.

IX. ABSTTREATMENT OF EMPLOYEE AND SHAREHOLDER BENEFITS

Employee benefits

Salaries, wages, commissions, and other cash remuneration, including gratuities, paid toemployees are not subject to ABST. However, non-monetary means of compensating


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employees, commonly referred to as fringe or employee taxable benefits, may be subject toABST.

For the most part, the ABST treatment of these benefits is based on their treatment under the Personal Income Tax Act. Generally, if a benefit is taxable for personal income tax

purposes, the employer will be considered to have made a supply of goods or service to theemployee. If the good or service that gives rise to the taxable benefit is subject to ABST, theemployer is considered to have collected ABST on that benefit. However, there aresituations where the employer will not be considered to have collected ABST on taxablebenefits given to employees. These are explained below.

Situations where the employer is not considered to have collected ABST

when the goods or services that give rise to a taxable benefit are ABST-exempt orzero-rated;

when a taxable benefit results from an allowance included in the income of theemployee, such as an unreasonable allowance for automobile expenses;

ExampleAn employer registered for ABST would like to reward an employee for outstandingperformance, and has agreed to pay for the hotel accommodation, and three meals a day, forone week, in Barbados. An amount will be included in the income of the employee as ataxable benefit. However, the employer will not be considered to have collected tax withrespect to the "benefit" provided to the employee since the supplies were made, enjoyedand/or consumed outside of Antigua and Barbuda.

When is an employer considered to have collected ABST?

An employer is considered to have collected ABST on a taxable benefit subject to ABST atthe end of the month in which the benefit was provided to the employee.

How to calculate the amount of ABST

The amount of ABST collected on a taxable benefit is calculated as a percentage of the valueof the benefit for ABST purposes.

Summary

The following steps will help determine whether an employer has to remit ABST onemployee benefits.

Step 1 - Establish whether the benefit is taxable under the Personal Income Tax and subjectto ABST. If the benefit is not taxable or is not subject to ABST, the employer will not haveto remit ABST on the benefit.


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Step 2 - If ABST is collected on a taxable benefit, the employer must calculate the amount ofABST due.

Employees do not pay ABST on taxable benefits - The employee does not pay the ABST the

employer has to remit on taxable benefits. An amount for ABST has already been added tothe taxable benefit.

Non-registrants

Non-registrants are not deemed as having made a supply for consideration when they providetaxable benefits. As a result, they are not required to remit ABST on taxable benefitsprovided for ABST purposes.

X. AMOUNTS TO BE INCLUDED IN INCOME

A.Automobile Benefits and Allowances

Definitions

Motor vehicle

A motor vehicle is an automotive vehicle designed or adapted for use on highways andstreets. It does not include a vehicle designed or adapted for any other use.

Automobile

An automobile is a motor vehicle that is designed or adapted mainly to carry individuals onhighways and streets, with a seating capacity of not more than the driver and eightpassengers.

An automobile does notinclude: an ambulance; a motor vehicle bought to use mainly as a taxi, a bus used in a business of

transporting passengers, or a hearse in a funeral business; a motor vehicle (except a hearse) for use in a funeral business to transport passengers;

or clearly marked police and fire emergency-response vehicles

Automobile availability

An automobile is available to employees if they have access to or control over the vehicle.Access ends when an employee returns all the automobile's keys.


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Personal driving or use

Personal driving is any driving by an employee, director, shareholder or a person related tothe employee, director or shareholder for purposes not related to his or her employment.

This includes:

vacation trips; driving for personal use; driving to conduct personal activities; and travel between home and work (even if the employer insists that the employee drive

the vehicle home).

This is considered personal use of the employer-provided vehicle, whether it is owned orleased by the employer, and is a taxable benefit to the employee, subject to the exemptiondetailed in this guide.

The personal driving of an employer's vehicle could be a taxable benefit for the employee.

Personal driving is any driving by an employee, or a person related to the employee, forpurposes not related to his or her employment.

IRD does not consider it to be personal driving in the following exceptions:

1. When the employer requires the employee to proceed directly from home to a point of callother than the employers regular place of business to which the employee normally reports,or to return home from such a point. In other words, travel that is considered to be for thebenefit of the employer.

2. There is not a personal use component when an employee is required to work at least three

additional hours immediately subsequent to the regular hours of work and publictransportation is not available, or the physical safety of the employee could be at risk at thetime of travel.

3. Employer-provided transportation to a location or at a time where public transportation isnonexistent.

Calculating a benefit to employee for use of employer owned automobiles

To clarify the administration of an automobile benefit to employees, a simplified model isbeing adopted. The automobile benefit charge represents the benefit employees enjoy when

an automobile is available for their personal use. Please see Appendix V for the actualcalculation of the benefit charge or amount.

If the employee does not use the automobile for personal driving, there is no taxable benefit,even if the vehicle was available to the employee for the entire year. This applies as long asthe employee is required to use the automobile in the course of his or her employment.


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Once an employer determines that there is personal driving with respect to an employersvehicle the employer must calculate the amount of the benefit and include the amount in theemployees income. These benefits or amounts are to be allocated to the associated employeepay period and income tax deducted accordingly.

Partnerships (Accountants, Lawyers; Doctors etc.) Include the amount of the vehiclebenefit in the income of a partner or an employee of a partner if a partnership makes anautomobile available for personal use to:

a partner or a person related to the partner; or an employee of a partner or a person related to an employee of a partner.

Automobile allowances

An automobile allowance means any payment employees receive from an employer for usingtheir own motor vehicle in connection with or in the course of their office or employment.This payment is in addition to their salary or wages, with an account for its use. Anautomobile allowance is taxable unless it is a reasonable per mile/per-kilometer allowance, asprovided for in this guide. The other exception is in respect of:

Bailiffs Invigilators at Medical Benefits Scheme Inspectors at Social Security Board, and Auditors at the Inland Revenue Department

Instead of providing the employee with a vehicle, employers may give the employee anallowance for using his or her own vehicle for work. This type of an allowance is not ataxable benefit as long as the allowance is calculated solely on the number of business

miles/kilometres driven in a year multiplied by a rate of $2.30 per mile or $1.45 perkilometre. This type of allowance is not a taxable benefit as long as the employee is requiredto use his or her vehicle for business purposes on a regular basis and the allowance does notexceed $2.30 per mile or $1.45 per kilometre. All amounts per month must be supported by amileage/kilometre log and a breakdown of business and personal travel.

Flat-rate allowance

If an employee (who is required to use his / her automobile on official business on a regularbasis) is paid an allowance based on a flat-rate that is not related to the number of businessmiles/kilometers driven, then the allowance is a taxable benefit, and has to be included in the

employee's income, as determined in the guidelines below.

If the employee IS NOT a traveling officer, and does not use his/her automobile to contributeto the income of his/her employer, then the FULL amount of any flat rate allowance paid hasto be reported as a taxable benefit and included in the employees income.

The cap on monthly flat-rate allowances is based on the employees salary scale/level asdetailed below. Any allowance paid in excess of the cap will be a taxable benefit.


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Employee Monthly Salary Scale Maximum Tax Free Benefit

$1,000 to $6,500 $550 $6,501 to $9,500 $750 $9,501 to $12,500 $900 $12,501 and over $1,000

Reasonable per mile/per-kilometer allowance

A travelling allowance based on an actual per mile/per-kilometre rate that IRD considersreasonable is not considered a taxable benefit.

IRD considers an allowance to be reasonable if all the following conditions apply:

The allowance is based only on the actual number of business miles/kilometers drivenin a year.

The rate per mile/per kilometer is reasonable (not greater than $2.30 per mile or $1.45per kilometer).

The employee was not reimbursed for expenses related to the use of the vehicle. Thisdoes not apply to situations where an employee is reimbursed for parking fees or

supplementary business insurance, if the allowance was determined without including

these reimbursements.

For greater certainty with regard to reasonable per mile/per-kilometer allowances, employeesmust file mileage or expense claims and related automobile/vehicle travel logs with theemployer on an ongoing basis, starting at the beginning of the year.

The IRD understands the administrative problems that can result from this and would like toprovide an alternative. If the employer makes accountable advances to employees for vehicleexpenses, these advances do not have to be included in the employee's income if all thefollowing conditions are met:

There is a pre-established per mile/per-kilometer rate that is not more than the amountstated above.

The rate and the advances are reasonable and are linked/supported by anautomobile/vehicle travel log of the business miles/kilometers travelled.

This method is documented in the employee's record.Employees must account for the business miles/kilometers they travel and any advances theyreceive. They have to do so on the date their employment ends in the year, or by the calendaryear-end, whichever is earlier.

Allowance rates


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For 2012, the rates are: $2.30 per mile or $1.45 per kilometer driven for business purposes

Auto travel allowance rates above $2.30 per mile or $1.45 per kilometer will be a taxablebenefit and must be included in the employee's income.

B.Other Benefits and Allowances

Aircraft and Boats

Where an employer provides an aircraft or boat, either owned or leased, for personal use byan employee, director or shareholder, at less than reasonable charge and the employee,director or shareholder is considered to have derived a benefit; the benefit amount is to beincluded in employment income and subject to the ABST if the aircraft/boat is used incommercial activities.

Housing Allowances

Free or subsidized board and lodging to an employee is a taxable benefit, subject to themonthly allowances detailed below. As a result, the employer must add to the employee'sremuneration the fair market value of the accommodation provided which exceeds the capstipulated below.

Cap on monthly housing allowance by salary scale / level:

$0 to $5,000 No benefit $5,001 to $7,500 $500 $7,501 to $10,000 $750 $10,001 to $12,500 $1,000 $12,501 to $15,000 $1,250 $15,001 to $20,000 $1,500 $20,001 and over $2,000

In instances where the employer pays the rent for premises occupied by employees, thisshould be reported as a benefit. If the property is owned by the employer the benefit to theemployee is the rent the property could fetch in the open market. The value of the benefitshould be reduced by any amount paid by the employee.

Bonuses

Bonuses and/or retroactive pay increases paid to employees must be included in employmentincome and are subject to income tax. These payments are subjected to statutory deductionsin the same way as regular emoluments.


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Commissions

Commissions paid to employees are to be included in employment income and are subject toincome tax. These payments are subject to statutory deductions in the same way as regularemoluments.

Loan forgiveness and write-offs

All employee, director, and shareholder loan forgiveness and loan write-offs will be includedin employment income of the employee, director and/or shareholder.

Credit Cards

Any payments made with respect to credit cards should be considered as emoluments to theemployee unless it can be proven that the credit card was used for the purpose of acquiring

income for the business.

Where the company provides the employee with a credit card and it is used solely forthe purpose of business entertainment, then it is not an emolument and all expenditureshould be treated as allowable for the business for tax purposes.

Where the company provides the credit card and the employee uses the card for bothbusiness and personal reasons, then the amounts that are personal will be consideredas emoluments and are subject to the relevant taxes.

Where the employee has a personal card and the employer pays all the expensesrelated to the card and these expenses are of a personal nature then the amounts paidwill be taxable as emoluments for tax purposes.

Directors Fees/Board Fees

The employer must deduct income tax from directors' fees/board fees.

The Director/Board Member shall inform the employer of the applicable tax bracket. This isto facilitate the withholding of income tax from the fees paid. In instances where thedirector/board member does not provide the information, the employer should contact theInland Revenue Department for guidance on the tax band to be applied. If the employer pays

both a salary and directors' fees/board fees to an individual, the fees must be added to thesalary for that pay period to calculate the amount of tax to deduct. All such deductions mustbe remitted to the Inland Revenue Department in the normal manner.

Discounts on services and merchandise and commissions on sales

Employers may provide services or sell merchandise to employees at a discount without itbeing a taxable benefit, provided that the discounted price is equal to or exceeds cost. If a


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service or merchandise is provided to employees below cost, this is a taxable benefit. Theexception to this is where the goods are old or soiled, in which event the benefit is not subjectto tax.

If employers sell merchandise in good condition to employees below cost, the taxable benefit

is the difference between the fair market value of the goods and the price the employees pay.

If a taxable benefit arises under any discount arrangement and it is not for an exempt or zero-rated supply, include ABST in the value of the benefit.

Commissionsthat sales employees receive on merchandise they buy for personal use are nottaxable. Similarly, when life insurance salespeople acquire life insurance policies, thecommissions they receive are not taxable as long as they own the policies and have to makethe required premium payments.

Employer-Paid Educational Costs

See Tuition Fees below.

Educational allowances for children

Amounts paid to an employee as an educational allowance for the employee's child, must beincluded in the employee's income for the year.

Entertainment

Reimbursed expenses incurred by employees to entertain clients of the business, do notconstitute a taxable benefit. However, in instances where an allowance is paid and theemployee is not required to specifically account for the expenditure, in order to bereimbursed, that allowance should be treated as a taxable benefit and included in theemployees income.

Group life insurance policies - Employer-paid premiums

This section applies to current and former employees (retirees) who receive group term lifeinsurance benefits from their employer or former employer.

Definitions

Group life insurance policy means a policy where the only amounts payable by the insurerare policy dividends, experience rating refunds, and amounts payable on the death ordisability of an employee or former employee.

Calculation


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If the premiums are paid regularly for all employees and the premium rate for each individualis not dependent on age or sex, there is no taxable benefit. A taxable benefit occurs when thepolicy is only applicable to certain employees. The value of the benefit is the total of:

the premiums payable for term insurance on the individual's life;less

the premiums and any taxes the employee paid either directly or throughreimbursements to the employer.

Holiday Trips and Incentive Awards

Where an employer pays for a vacation for an employee, the employees family or both, thecost to the employer constitutes a taxable benefit to the employee. Similarly, where avacation property owned by an employer is used for vacation purposes by an employee, theemployees family or both, there is a taxable benefit conferred on the employee, the value ofwhich is equivalent to the fair market value of the accommodation less any amount which the

employee paid to the employer.

The taxable benefit may be reduced if there is conclusive evidence to show that the employeewas involved in business activities for the employer during the vacation. In a situation wherean employees presence is required for business purposes and this function is the mainpurpose of the trip, no benefit will be associated with the employees travelling expensesnecessary to accomplish the business objectives of the trip if the expenditures are reasonablein relation to the business function.

Where a business trip is extended to provide for a paid holiday or vacation, the employee isin receipt of a taxable benefit equal to the costs borne by the employer with respect to that

extension.

There may be instances where an employee acts as a host or hostess for an incentive awardtrip arranged for employees, suppliers or customers of the employer. Such a trip will beviewed as a business trip provided the employee is engaged directly in business activitiesduring a substantial part of each day (e.g., as organizer of activities); otherwise it will beviewed as a vacation and a taxable benefit, subject, of course, to a reduction for any actualbusiness activity.

.

Payment for Personal Household ServicesAmount paid to or on behalf of an employee for household personnel such as maid, cook,gardener, and security, etc., must be included in the employee's income for the year.


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Accommodation Provided by Employer

If an employer provides an employee, including a building superintendent, with a house,apartment, or similar accommodation rent-free or for less than the fair market value of suchaccommodation, the employee is considered to be receiving a taxable benefit. Amounts paidfor employees for utilities (such as phone, electricity, internet and LPG) are also a taxablebenefit.

The employer must estimate a reasonable amount for the benefit. It is usually the fair marketvalue for the same type of accommodation minus any rent the employee paid.

If an employer gives an employee cash for rent or utilities, the value of the housing benefit isthe amount of the cash payment. This is the amount that should be included in the employee'sincome.

Legal Fees

Where personal legal expenses of an employee (or of his or her family) are paid orreimbursed by the employer, the amount paid is a taxable benefit to the employee. To theextent that the IRD considers that the amount so paid does not exceed a reasonable amount, itwill normally be deductible to the employer as a business expense on account of theemployees wages orbenefits. The exception is in respect of employees of legal firms, whoseemployers are permitted to provide free or subsidized legal services for employees, without itbeing a taxable benefit.

Loans - interest-free and low-interest

Employers must include in income any benefit that an individual receives as a result of aninterest-free or low-interest loan greater than $10,000. The exceptions are where the loan isused to: (i) purchase residential land; (ii) construct an owner occupied residence; (iii) pay

medical; (iv) pay educational expenses and (v) purchase a motor vehicle. The benefit is theamount of interest that the individual would have paid on the loan for the year at the Antiguaand Barbuda standard customer rates minus the amount of interest that he or she actually paidon the loan in the year or no later than 15 days after the end of the year.The exception is inrespect of employees of financial institutions (commercial banks, credit unions, insurancecompanies, mortgage companies etc), whose employers are permitted to provide interest-freeor low-interest loans to them.

Example to Calculate Taxable BenefitMr. John Davis is your employee, and you grant him a loan of $20,000 to purchase shares inyour company. The standard rate charged by a bank for such a loan is 10% per annum, butyou charge Mr. Davis a rate of 5% per annum on the loan. Assuming that only interest waspaid on a monthly basis, but no payments were made to the principal debt, the value of thebenefit is calculated as follows:


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$20,000 @ 10% ( standard bank rate) per annum $2,000 (A)

Less interest paid by Mr. Davis as follows

$20,000 @5% (preferential rate) per annum $1,000 (B)

Taxable Benefit A minus B or $2,000 minus $1,000 = $1,000

Even if Mr. Davis is in the highest tax band of 25%, his maximum tax liability from thisbenefit would be 25% of $1,000 or $250. In this case, he still saves $750 compared withborrowing from a bank. If he is in the 10% tax bracket, the tax paid would reduce to $100and the saving increase to $900.

Loans received because of employment

An employee receives a taxable benefit if he or she receives loans greater than $10,000because of an office or employment or intended office or employment. IRD considers a loanto be received because of employment if it is reasonable to conclude that the loan would not

have been received, or the conditions of the loan would have been different, had there beenno employment or intended employment.

The loan can be received by the employee or by another person. A loan includes any otherindebtedness such as the unpaid purchase price of goods or services.

The taxable benefit the employee receives in the taxation year is the total of the followingtwo amounts:

a) the interest on each loan and debt (total loans and debt greater than $10,000)calculated at the Antigua and Barbuda prescribed rate for the periods in the year

during which it was outstanding; and

b) the interest on the loans or debt that was paid or payable for the year by theemployer (for this purpose, an employer is a person or partnership that employs orintends to employ the individual and also includes a person related to the person orpartnership);

minusthe total of the following two amounts:

c) the actual interest for the year that any person or partnership paid on each loan ordebt no later than 15 days after the end of the year; and

d) any part of the actual interest that the employee pays back to the employer no later

than 15 days after the end of the year.

Example of calculating the taxable benefit

Mr. Theodore Williams is your employee. He borrowed $100,000 from you on January 2,2012. The prescribed rate of interest for the loan for 2012 is 3% for the first, second, andfourth quarters, and 4% for the third quarter. Mr. Williams paid you $750 interest on theloan no later than 15 days after the end of the year. During the year, a company related to


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you paid $1,000 interest on the loan for Mr. Williams. Before the end of the same year, Mr.Williams repaid $850 of the $1,000 to the company.

Calculate the benefit to include in his income as follows:

1/ Prescribed rate loan amount for the year:

3% x $100,000 x = $2,2504% x $100,000 x = $1,000

$3,250 (A)

plus2/ Amount interest paid by a related third party

$1,000$4,250 (B)

minus3/ Interest paid ($750 + $1,000)= $1,750

4/ Amount Mr. Williams repaid $ 850

$2,600 (C)

Mr. Williams Taxable Benefit (B)(C) or ($4,250 - $2,600) = $1,650

Mr. Williams Taxable Benefit is $1,650 for the year. Tax will be charged on thisamount at either 10% or 25%, depending on his tax band.

Redundancy, Lump sum, honorarium, and ex-gratia payments

An amount paid to an employee in lieu of termination notice under the terms of anemployment contract is considered employment income, whether or not it is paid ontermination of the employment. Such an amount is subject to income tax. To determine theamount to deduct, include the wages in lieu of termination notice with the regular income, ifany, for the pay period.

Lump sum payments include: Payments for loss of office Ex-gratia payments Payments in commutation or in lieu of pensions (except commutation payments made

through an approved superannuation scheme).

The taxable portions of the above payments are subject to statutory deductions in the normalway.


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Premiums under Hospitalization and Medical Care Insurance Plans

This section applies to current and former employees (retirees) who receive grouphospitalization and medical care insurance benefits from their employer or former employer.

Definitions

Group hospitalization and medical care insurance policy means a group policy where theonly amounts payable by the insurer are amounts payable on the hospitalization and medicalcare expenses of an employee or former employee.

Lump-sum premium is a premium for insurance on hospitalization and medical care whereall or part of the premium is for insurance for a period that extends more than 13 months afterthe payment of the premium (or more than 13 months after the time the premium becamepayable, if it is paid after it became payable).

Calculation

If the premiums or contributions to a hospital or medical care insurance plan are paidregularly for all employees and the premium rate for each individual is not dependent on ageor sex, there is no taxable benefit. A taxable benefit occurs when the policy is onlyapplicable to certain employees. The value of the benefit is the total of:

the premiums payable for group insurance on the individual's hospitalization andmedical care;

less the premiums and any amounts the employee paid either directly or through

reimbursements to the employer related to the hospital or medical care insuranceplan.

Professional Membership Fees

If an employer pays professional membership dues for an employee and the employer is theprimary beneficiary of the payment, there is no taxable benefit for the employee.

The primary beneficiary is a question of fact. If the employer pays or reimburses professionalmembership dues because membership in the organization or association is a condition of

employment, the employer is the primary beneficiary and there is no taxable benefit for theemployee.

When membership is not a condition of employment, the employer must determine theprimary beneficiary. The employer must be prepared to justify this position if asked by theIRD. In all situations where the employer pays or reimburses an employees professionalmembership dues and the primary beneficiary is the employee, there is a taxable benefit forthe employee.


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Employees cannot deduct from their employment income professional dues that the employerhas paid or reimbursed.

Recreational facilities and club dues

Recreational facilities for employees such as an exercise room, swimming pool, orgymnasium, or employer-paid membership to a business or professional club (that operatesfitness, recreational, sports, or dining facilities for the use of their members but their primarypurpose is something other than recreation) are a taxable benefit. This occurs when theemployer subsidizes, pays, or reimburses the cost of the membership for employees.However, the use of the facility or club does not give rise to a taxable benefit if it can beclearly shown that such membership is principally for the employers advantage rather thanthe employee's.

Retirement allowance

A retiring allowance (also called severance pay or gratuity) is an amount paid to officers oremployees when or after they retire from an office or employment, in recognition of longservice or for the loss of office or employment.

A retiring allowance includes:

Any ex-gratia payment made, over and above the standard severance payment due Payment for accumulated vacation leave not taken prior to retirement;

A retiring allowance does not include:

a superannuation or pension benefit; an amount an individual receives as a result of an employees death (these payments

may be treated as death benefits); a benefit derived from certain counseling services; wages in lieu of termination notice; damages for wrongful dismissal, and damages for violations or alleged violations of an employees human rights awarded

under human rights legislation to the extent these amounts are not taxable.

Retiring allowances for services rendered in Antigua and Barbuda are subject to income taxfrom any part paid directly to the recipient, after accounting for the personal and pensionexemptions set out in this guide. This applies whether or not the beneficiary is resident inAntigua and Barbuda.


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Salary deferral arrangements

A salary deferral arrangement is a plan or arrangement made between an employee and anemployer. Under such an arrangement, an employee postpones receiving salary and wages toa later year. Treat the deferred salary and wages as employment income in the year theemployee earns the amount. In short, the employer and employee may agree that theemployee will receive the salary/wages at a future time, however the amount must beincluded in employment income when it was earned.

Securities, Shares and Stock Options

When a corporation agrees to sell or issue its shares to an employee, or when a mutual fundtrust grants options to an employee to acquire trust units, the employee may receive a taxablebenefit.

The taxable benefit is the difference between the fair market value of the shares or unitswhen the employee acquired them and the amount paid, or to be paid, for them, includingany amount paid for the rights to acquire the shares or units.

In addition, a benefit can accrue to the employee if his or her rights under the agreementbecome vested in another person, or if they transfer or sell the rights.

The shares or trust units are considered to be acquired when legal ownership of the shares hasbeen transferred and the vendor has entitlement to receive payment. In general, this wouldoccur where the shares have been transferred to the employee/broker and paid for.

Include this benefit in Employment income.

Shareholders Benefits and Allowances

A Shareholder is a member or other person that has an equity position in the entity or isentitled to receive payment of a dividend.

The amount or value of a benefit or an allowance conferred on a shareholder by a corporationin a taxation year is included in the shareholders income for the year.

A benefit or an allowance conferred by a corporation can also be included in the income of a

person who at the time the benefit was conferred was not a shareholder, if it wascontemplated that the person would become a shareholder.

The word benefit and allowance is broad enough to include:

(a) a payment by a corporation to a shareholder otherwise than pursuant to a bona fidebusiness transaction;


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(b) an appropriation of a corporations funds or other property in any manner whateverto, or for the benefit of, a shareholder; or(c) any other benefit, allowance or advantage conferred on a shareholder by acorporation.

If the person who receives the benefit is both a shareholder and an employee of thecorporation, a determination will have to be made, taking into consideration all the relevantfacts and circumstances of the particular case, as to whether the benefit was conferred by thecorporation on the person as a shareholder or as an employee.

The consideration for shareholder and employeebenefits is determined to become due to theABST registrant or employer on the last day of the registrant's taxation year in which thebenefit was made available to or received by the shareholder. For example, where thecorporation's taxation year ends on December 31, 2011, the ABST on a taxable benefitreceived by a shareholder in the 2011 taxation year is deemed to become due to the registranton December 31, 2011.

The registrant is required to remit the ABST in respect of the shareholder's taxable benefit inthe reporting period following the period in which the consideration became due. Forexample, a registrant who remits monthly would remit the ABST on the shareholder's taxablebenefits conferred in the registrant's 2011 taxation year ending December 31, 2011, onFebruary 15, 2012, when submitting the prescribed annual return.

Spouse or common-law partner's travelling expenses

If a spouse or common-law partner accompanies an employee on a business trip, the amountreimbursed to the employee for the spouse or common-law partner's travelling expenses is ataxable benefit to the employee. If ABST applies to the travelling expenses, the employermust include it in the value of the benefit.

The reimbursement is not considered a taxable benefit if the spouse or common-law partnerwent at the employers request and was mostly engaged in business activities during the trip.

Subsistence Allowance

Reasonable subsistence allowances given to employees for deemed/actual expenses incurredwhile working at a special work site or on travel status are reimbursable expenses and as aresult would not be considered as a benefit and would not be taxed. Payments made to

employees, which are termed subsistence allowances, should be paid at a scale rate asdetermined by the location of the work site or travel.

Subsistence in excess of rates set by the Inland Revenue Department will be deemed ataxable benefit. The Inland Revenue Department will set the rates on an annual basis.


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Transportation passes and assistance benefits

Employees of airline companies may receive an unlimited number of tickets at a rate below50 per cent of the regular economy fare, without that benefit being deemed subject to incometax, provided the employees travel on a space available (stand-by) basis.

However, airline passes available to airline employees will become taxable if the employeetravels on a space-confirmed basis and is paying less than 50 per cent of the economy fareavailable on that carrier for that trip on the day of travel.

The value of the benefit will be the difference between 50 per cent of the economy fare andany amount reimbursed to the carrier for that trip.

Retired employees of airline companies will not be taxed on pass benefits under anycircumstances.

Utilities provided by the employer

Some employers may pay for the utilities (water, electricity, telephone, internet, etc.) of theiremployees. In these cases the full cost of the amount either reimbursed or provided cost freemust be included in income earned including the ABST where applicable.

Wage Loss Replacement Plans

If an employer arranges for insurance coverage that guarantees the income of any employeeor director, otherwise referred to as a wage-loss replacement plan or an income maintenanceplan, the premium paid is a taxable benefit if this benefit is not available to all employees.

If the employer pays a premium for an employee for such plans that are group plans, theemployer-paid premium is not a taxable benefit for the employee.

XI. RESTRUCTURING OF REMUNERATION PACKAGEThe Inland Revenue Department has uncovered empirical data which suggest that followingthe reintroduction of Personal Income Tax in 2005, some employers and self-employedpersons have restructured their remuneration packages to reflect the transitioning of a portionof basic salaries to benefits and allowances. Upon implementing the provisions for taxing

allowances contained in this document, and for administrative purposes, the Inland RevenueDepartment will disallow all such transfers, and consider the full amount of the remunerationpackage as being subject to tax.

In addition, the Department shall levy the applicable penalties in respect of false reporting ofinformation.


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XII. PLAYERS,ADMINISTRATORS, AND EXECUTIVES EMPLOYED BY SPORTINGCLUBS

Players income from employment includes any of the following items received in respect of

employment:

(a) salaries, including income from personal service contracts,(b) bonuses - for good performance, for all-star rating, for signing contracts, etc.,(c) fees - for promotional activities or special services performed on behalf of the club,(d) living and travelling allowances,(e) honoraria,(f) payment for time lost from other employment,(g) commuting expenses,(h) free use of automobiles,(i) awards - including cash and the fair market value of bonds, automobiles and other

merchandise.(j) payments made by a club on a player's behalf that would otherwise be anondeductible expense to the player, such as agents' fees, legal fees, taxes, fines, etc.(k) other benefits.

Players' living and travelling expenses that are borne by the club are treated as non-accountable allowances paid to players, including those paid in the training and tryout period.


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XIII. DEFENSE FORCE ALLOWANCES

Benefit / Allowance TaxableTraining NoRent Free Accommodation No

Rent No

Ration NoEfficiency NoSubsistence NoOverseas Duty No

Warm Clothing NoHard-Lying No

Proficiency Grade NoDuty Yes

Entertainment NoChaplaincy Fees No

Conference / Meeting NoSporting Events No

Intelligence NoPlain Clothes NoCommand Pay Yes

Operations Overseas NoActing Yes

Telephones No

XIV. POLICE FORCE ALLOWANCES

Benefit / Allowance TaxableSpecial Service Unit NoTechnical Mechanical No

Barbuda No

Special skills NoDetective NoDuty YesTravelling No

Fire Brigade Resp. No

Housing NoPlain clothes NoBand No

Transfer NoSubsistence No

XV. FIRE BRIGADE ALLOWANCES

Benefit / Allowance TaxableDuty Yes

Travelling NoTechnical No

Barbuda NoAmbulance No


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APPENDIX I: DEFINITIONS AND INTERPRETATION

assessable income means an individuals income otherthan(a) income which is exempt from the tax by or under this Act or any other law;

(b) income which is, under any agreement to which the Government is a party,exempt from the tax;

assessable employment income means income derived from any of the sources mentionedin section 11; For easy reference Section 11 states: Subject to this Act tax shall be paid onemployment income including

(a) salary, wages, leave payments, overtime payments, gratuities, commissions, and

bonuses;

(b) directors fees;(c) any allowance, other than an allowance provided by the employer which is

wholly and exclusively utilized in the production of the employers assessable

income;(d) any payments, however described, made on termination of employment in respect

of entitlements outstanding at the time of termination, excluding severance payment;

(e) the reimbursement or discharge by an employer of any expense of the employee

other than an expense wholly and exclusively incurred in the production of the

employers assessable income;

(f) the amount of any waiver where an employer waives an obligation of the employee

to pay an amount owing to the employer.

chargeable income means an individuals assessable income from all sources lessdeductions permitted under this Act,

(a) employment income;(b) self-employment and other income; or(c) both employment income and self-employment and other income.

Commissioner means the Commissioner of Inland Revenue appointed pursuant to theInland Revenue Administration Act;

contract of employment means any arrangement, whether executed by a formal contract,informal agreement, or any other means, for the establishment of an employmentrelationship;

employee means a person who performs services pursuant to a contract of employment andalso means a former employee;

employer means a person who receives the benefit of services performed pursuant to acontract of employment or the person responsible for providing an employee with incomefrom employment and also means a former employer;


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employment means the provision of personal services by an individual where:

(a) the services are provided under the control or guidance or responsibility of theperson for whom the services are performed; and(b) the resources required to provide the service are mostly provided by the person for

whom the services are performed;

employment income means any emoluments or benefits whether in cash or in kindaccruing to or received by an employee in respect of employment;

income year means

(a) the period commencing on the 1st April, 2005 and ending on the 31st December,2005; and(b) in respect of any period subsequent to 31st December, 2005, the periodcommencing on the 1st January and ending on the 31st December of the same year;

individual includes a minor;

Minister means the Minister responsible for finance;

personal allowance means the amount of income not liable to tax as provided in theSchedule;

resident in Antigua and Barbuda has the same meaning as in section 2 of the Income TaxAct;

self-employment and other income means an individuals income other than employmentincome; and the expression shall be construed either conjunctively or disjunctively,as the case may require;

tax means the personal income tax imposed by section 8, and includes tax penalties andinterest provided for in this Act;

tax tables means tax tables referred to in section 10

trade has the same meaning as in section 2 of the Income Tax Act.


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APPENDIX II: EMPLOYEE OR SELF-EMPLOYED WORKER!

It is important to determine whether a worker is an employee or a self-employed individual,as it can also have an impact on how a worker is treated under legislation such as the

Personal Income Tax Act. The facts of the working relationship as a whole determine theemployment status.

If the worker is an employee (employer-employee relationship), the payer is considered anemployer.

Employers are responsible for deducting income tax from remuneration or other amountsthey pay to their employees and remitting these deductions to the Inland RevenueDepartment.

APPENDIX III: DETERMINING A WORKERS EMPLOYMENT STATUS

Certain factors have to be considered when determining if a worker is an employee or a self-employed individual. In this regard please refer to Appendix VI for details.

APPENDIX IV: SPECIAL SITUATION

Placement or Employment Agency Worker

These guidelines apply to employees/workers engaged by placement or employmentagencies, in the following four situations:

agency that hires the employee; agency that pays the worker; agency whose client pays the worker; or agency that hires a worker under a contract for service.

Agency that Hires the Employee

An agency that hires an employee (even if he or she is located at a clients premises) has to

deduct income tax from amounts paid to these employees. The agency also has to reportthese amounts on an F47 Pay as You Earn Monthly Declaration Form and an F47AEmoluments and Tax Deducted.


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Agency that Pays the Worker

If an agency places a worker in employment under the direction and control of a client of theagency and the agency pays the worker, the agency is required to deduct income tax fromamounts paid to these workers. The agency also has to report these amounts on an F47 Pay asYou EarnMonthly Declaration Form and a F47A Emoluments and Tax Deducted form forthe worker.

Agency whose client pays the Worker

If an agency places a worker in employment under the direction and control of a client of theagency and the client of the agency pays the worker, the client is required to deduct and remitincome tax. The client of the agency has to report these amounts on an F47 form.

Agency that Hires a Worker under a Contract for Service

An agency that hires a worker under a contract for service (that is, an independent worker) isnot required to deduct income tax since the worker is self-employed. Because the worker isself-employed, neither the agency nor the client is required to file an F47 monthly declarationform.

However the self employed worker is required to file an F50 form and remit the appropriatePIT installment, on a monthly basis.


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APPENDIX V: CALCULATING AUTO BENEFIT FORM (2012)

Use the table below to determine the employee's/directors automobile benefit, in instanceswhere the employee/director is provided with use of a company owned and maintainedvehicle. This benefit should be reported on an F47 form.

In instances where the employee was not provided with a vehicle for the entire year, use thetable to determine the automobile benefit amount to prorate to the employee's pay periods for2012.

Column A Column B Column C

RangeOriginal Cost of

Automobile includingDuty, ABST, etc.

Annual TaxableBenefit

1 Up to $12,000 $1,1252 $12,001 - $28,000 $1,850

3 $28,001 - $40,000 $4,1254 $40,001 - $60,000 $6,0005 $60,001 - $80,000 $9,0006 $80,001- $100,000 $12,000

7 $100,001 - $120,000 $15,0008 $120,001 - $140,000 $18,0009 $140,001 - $160,000 $22,50010 $160,001 - $180,000 $27,00011 $180,001 - $200,000 $31,500

12 Over $200,000 $36,000


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Appendix VI: Determining a Workers Employment Status

Determining a Workers Employment Status

Certain factors have to be considered when determining if a worker is an employee or a self-

employed individual. These factors may differ if the contract is formed in another country.Usually, the country where the contract was formed will determine which set of factors touse.

In a written contract, the parties may state that in the event of a disagreement respecting thecontents of the contract, the applicable law may be the Guadeloupe (Civil Code), eventhough the contract was formed for example in Antigua and Barbuda (common law).Depending on where the contract is formed, unless it is stated differently in the writtencontract, use the following set of factors.

Factors to consider

To help the employer understand the process, we explain each factor and show someindicators that the worker may be an employee or a self-employed individual.

Control

Control is the ability, authority, or right of a payer to exercise control over a workerconcerning the manner in which the work is done and what work will be done.

Degree of control or autonomy

Consider the degree of control held by the payer or the degree of autonomy held by theworker. The actual degree of control will vary with the type of work and the skills of theworker.

The determination of the degree of control can be difficult when examining the employmentof professionals such as engineers, doctors, and IT consultants. Because of their expertise andspecialized training, they may require little or no specific direction in their daily activities.

When examining the factor of control, it is necessary to focus on both the payers control

over the workers daily activities, and the payers influence over the worker.

Payers right to exercise control

It is the right of the payer to exercise control that is relevant, not whether the payer actuallyexercises this right. It is the control of a payer over a worker that is relevant, and notthecontrol of a payer over the end result of a product or service purchased.


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Indicators that the worker is an employee

The relationship is one of subordination. The payer will often direct, scrutinize, andeffectively control many elements of how and when the work is performed.

The payer controls the worker with respect to both the results of the work and themethod used to do the work. The payer determines and controls the method and amount of pay. Salary negotiationsmay still take place in an employer-employee relationship.

The worker requires permission to work for other payers while working for thispayer.

Where the schedule is irregular, priority on the workers time is an indication ofcontrol over the worker.

The payer determines what jobs the worker will do. The worker receives training or direction from the payer on how to do the work. The

overall work environment between the worker and the payer is one of subordination. The payer chooses to listen to the workers suggestions but has the final word.

Indicators that the worker is a self-employed individual

A self-employed individual usually works independently within a defined framework. The worker does not have anyone overseeing his or her activities. The worker is usually free to work when and for whom he or she chooses and may

provide his or her services to different payers at the same time. The worker can accept or refuse work from the payer. The working relationship between the payer and the worker does not present a degree

of continuity, loyalty, security, subordination, or integration, all of which aregenerally associated with an employer-employee relationship.

Tools and equipment

Consider if the worker owns and provides tools and equipment to accomplish the work.Contractual control of, and responsibility for, an asset in a rental or lease situation is alsoconsidered under this factor. What is relevant is the significance of the investment in thetools and equipment along with the cost of replacement, repair, and insurance.

A worker who has made a significant investment is likely to retain a right over the use ofthese assets, diminishing the payers control over how the work is performed. In addition, a

significant investment in tools and equipment and the maintenance and replacement costsassociated with these assets may place the worker at the risk of a loss.

Tools and equipment can vary widely in terms of value and can include everything fromwrenches and hammers, to costumes, appliances, stethoscopes, musical instruments,computers, and vehicles such as trucks and tractors.


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Self-employed individuals often supply the tools and equipment required to complete acontract. As a result, the ownership of tools and equipment by a worker is more commonlyassociated with a business relationship. However, employees can also be required to providetheir own tools. The common law courts within the world have acknowledged that because aworker is required to provide tools of the trade, this does not in itself deem that worker to be

a self-employed individual. For example, many skilled tradespeople such as auto mechanicsare required to supply their own tools, even if they are full-time employees.


The payer supplies most of the tools and equipment required by the worker. Inaddition, the payer is responsible for repair, maintenance, and insurance costs.

The worker supplies the tools and equipment and the payer reimburses the worker fortheir use.

The payer retains the right of use over the tools and equipment provided to theworker.


The worker provides the tools and equipment required for the work. In addition, theworker is responsible for the costs of repairs, insurance, and maintenance to the toolsand equipment.

The worker has made a significant investment in the tools and equipment and theworker retains the right over the use of these assets.

The worker supplies his or her own workspace, is responsible for the costs tomaintain it, and performs substantial work from that site.

Subcontracting work or hiring assistants

Consider if the worker can subcontract work or hire assistants. This factor can help determinea workers business presence because subcontracting work or hiring assistants can affect theirchance of profit and risk of loss.


The worker cannot hire helpers or assistants. The worker does not have the ability to hire and send replacements. The worker has

to perform the services personally.


The worker does not have to perform the services personally. He or she can hireanother party to either complete the work or help complete the work, and pays thecosts for doing so.

The payer h

paye and benefits draft outline feb 08 2012- rev

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