ACCA Advanced Taxation (ATX) Practice Exam

Is job-related accommodation taxable or exempt for employees?

1. Taxable with a basic charge

2. Taxable with additional accommodation charges

3. Exempt from tax without any charges

4. Exempt only if benefits exceed income

The correct answer is: Exempt from tax without any charges

Job-related accommodation provided to employees can be treated as exempt from tax under specific conditions, which aligns with the rationale behind the correct answer. When an employer provides accommodation that is necessary for the employee to perform their job duties, it is often considered a tax-exempt benefit. This exemption is rooted in the idea that as long as the accommodation is not a personal benefit but is solely for the purpose of enabling the employee to carry out their work responsibilities, it should not contribute to the employee's taxable income. The law is designed to prevent unnecessary tax burdens on employees who require accommodation to fulfill their roles effectively. For instance, if an employee is required to live on-site or in specific housing due to the nature of their job—such as a caretaker or a remote worker associated with a specific project—the provision of such accommodation is typically viewed as a necessary business expense. This understanding of job-related accommodation not being taxable reflects an intention to support employees in performing their roles without penalization through additional taxation.