ACCA Advanced Taxation (ATX) Practice Exam

What percentage of employment income is applicable if expenses are considered for job-related accommodation?

1. 5%

2. 10%

3. 15%

4. 20%

The correct answer is: 10%

In the context of employment income and job-related accommodation expenses, the standard percentage applied is 10%. This percentage is significant because it reflects a logical determination of how much of the accommodation expenses can be allocated as a necessary business expense when an employee is required to stay away from their usual place of work. This 10% figure is utilized to assess the proportion of an employee's accommodation expenses that are deemed allowable for tax purposes. It is important for tax calculations, as it helps to ensure that employees are not penalized for costs incurred while fulfilling their job responsibilities, particularly in scenarios where they must travel for work. Using this deduction effectively reduces the overall taxable income for the employee, thereby providing a tax benefit related to the necessary expense of maintaining job-related accommodation. Understanding this percentage is crucial for tax professionals when preparing accurate tax returns and advising clients on allowable employment expenses.