ACCA Advanced Taxation (ATX) Practice Exam

What does the term 'golden hello' refer to in a tax context?

1. A bonus for project completion

2. A lump sum payment to induce employment

3. A salary increase after probation

4. A severance package

The correct answer is: A lump sum payment to induce employment

In a tax context, 'golden hello' refers to a lump sum payment made to a new employee as an incentive to join a company, particularly when they have high skills or expertise that the company needs. This payment is usually granted at the start of employment and functions as a means to attract talent in competitive job markets. The taxation implications for both the employer and the employee can be significant, as these payments may be treated as taxable income. This term specifically contrasts with other options such as bonuses for completing projects, salary increases after probationary periods, or severance packages, which are related to different scenarios in the employment lifecycle. Each of these terms carries its own tax treatment and implications but does not encapsulate the essence of what a 'golden hello' signifies, which is primarily an inducement for new hires.