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I'm a programmer and the company I work for reimburses gym expenses. This is being taxable, so I end up not getting back the full amount I spent.

I'm trying to understand page 34 of the IR Employer Guide, where it says Benefit allowances are taxable, but "the taxable value of the benefit is the difference between the market value of the benefit provided, and any amount the employee pays".

So let's say the gym membership costs $60. I pay $60 to the gym, my employer pays me $60 back. So there is no "difference between the market value of the benefit and any amount the employee pays" - everything is $60, the difference is zero. Still, I'm being taxed on $60.

But I don't even know if gym reimbursement is a Benefit allowance, or a Reimbursing allowance (page 35) or if it is an allowance at all, or something else.

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    I'm not sure I follow your third paragraph - could you perhaps edit to clear it up? The "market value" would be the cost of the gym expenses, and the "amount the employee pays" would be zero, so I'm not sure where you get the difference being zero as opposed to the full amount of the expenses. – yoozer8 Jan 14 at 12:55
  • @yoozer8 I've edited it, thanks. – Roberto Jan 14 at 20:20
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I think you've got this backwards. If you pay for something that your employer then reimburses you for, the amount you've paid in the end is 0. So you would owe tax on the full value of the benefit.

If anything this would count as a "Benefit allowance" - it's certainly not a "Reimbursing allowance" which is defined as:

Reimbursing allowances are payments made to employees to compensate them for expenses they've incurred while doing their job, eg, mileage allowances, clothing allowances, tool money, meal allowances or overtime meal allowances.

But even that may be overthinking it. Benefit allowances are really there for things that the employer provides to you directly, not that you buy yourself. The simple fact for the tax authorities here is that your employer gave you some money, and that's taxable as part of your salary. The fact that your employer may have made it conditional on you getting a gym membership is irrelevant because gym memberships aren't tax deductible.

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In your case, it's simple: your employer is giving you $60 to reimburse your membership, so that's essentially $60 in additional, taxable income.

The wording in the employer guide is to cover situations where you are not reimbursed, but instead your employer pays the gym directly. So you have a $60 gym membership that you yourself pay $0 for. The taxable benefit is then $60 (the market value) - $0 (your contribution) = $60. You would thus be taxed on $60, even though you never received $60: you just received something (the gym membership) worth $60.

Suppose, however, the benefit was different: your employer will pay directly to the gym 75% of your gym membership fees. Now you actually do have to do a little math to figure out how much to report on your taxes. Each month, you'll pay $15 (25% of the total) and your employer will pay $45 (the other 75%). Even though you never see that $45, it is still considered a taxable benefit, so you would pay taxes on it just as if you had received cash.

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