Determine if the following fringe benefits are taxable under salaries tax
(a) A $100 cash coupon given by an employer to an employee as a birthday gift.
(b) Tips given to a waiter in a restaurant.
(c) An ex-gratia payment by the employer in the form of a gold coin in recognition of a job well done. The coin had a face value of $1,000 but a market value of $2,000 at the date of payment.
(d) A gas bill settled directly by the employer for quarters occupied by an employee who had entered into the contract with the gas company.
(e) Payment in lieu of notice made by the employer for early termination of employment of an unsatisfactory employee.

Answers
(a) As the cash coupon is a personal gift and not a reward for services, it is not assessable to salaries tax.
(b) Payment from someone other than the employer is assessable if the payment is income from the employment. Hence, the tips given to the waiter are clearly assessable. In any event, the assessability of receipts from a third party is covered by the inclusion in section 9(1)(a) of the words ‘….whether derived from the employer or others…’.
(c) So far as the payment was a reward for services, the fact that it was not stipulated in the employment contract would not affect its assessability. Furthermore, as the gold coin had a cash equivalent of $2,000, it is this figure that should be assessed.
(d) In this case, as it was the employee who had entered into the contract with the gas company, he had the liability to pay the gas bill. By paying the bill, the employer had in fact discharged the liability of the employee. This is clearly ‘money’s worth’ and is assessable to salaries tax.
(e) The nature of such a payment is, in essence, compensation or damages resulting from the employer’s failure to give the requisite notice. Hence, this item is not assessable in the hands of the employee because it is not a reward for services. However, it should be noted that if there is term of payment for loss of employment in the employment contract, Inland Revenue would argue that the payment was an award from employment.