Two recently published Board of Review cases involve the taxation of housing benefits provided by employers. In one case, the Board held that the housing benefits took the form of rental refunds and therefore only the rental value of the accommodation was included as a taxable benefit for salaries tax purposes. Under this characterization, the rental value may be less than the actual amount of rent reimbursed by the employer – a potentially favorable result. In a somewhat similar case, however, the Board did not apply the rental refund rules and instead concluded that the housing benefits were simply cash allowances and thus wholly subject to salaries tax.
These two decisions suggest that in order to support a more favorable rental refund characterization, companies should put in place an effective control system reflected in company policies but also exercised in the actual administration of the program. In addition, employees participating in such program should have contemporaneous written records to evidence actual rent paid for their places of residence.