S.L. 123.7 ст. 4Deductions in respect of emoluments.

(1) When a person pays emoluments in a year immediately preceding any year of assessment commencing on or after the 1st

January, 2002, and such payment represents outgoings and expenses incurred wholly and exclusively in the production of his income, the deductions that may be allowed in respect thereof for that year of assessment under article 14(1) of the Act shall not exceed the amount of the said outgoings and expenses that relate to emoluments that have been duly accounted for.

(2) Without prejudice to subrule (1), a deduction under article 14(1) of the Act relating to the provision of a fringe benefit falling under Part C (Category 2 Benefits - Use of Property) of the Fringe Benefits Rules shall not exceed the lower of:

(a) the outgoings and expenses, determined in accordance with the relevant provisions of Part IV of the Act, incurred in the provision of the said fringe benefit; and

(b) the value of that fringe benefit as determined in accordance with the said rules without, however, any reduction in the value contemplated in subrule 24(5) of the said rules with respect to any rent paid by the beneficiary: Provided that where any rent or other consideration is paid by the beneficiary it shall constitute income in the hands of the provider of the benefit.

(3) The following provisions of this subrule shall apply, without prejudice to subrule (1), for determining the deduction, if any, that may be allowed to a person under article 14(1) of the Act relating to the provision of a fringe benefit consisting in a transfer of an asset to which Part D (Category 3 Benefits - Other Benefits) of the Fringe Benefits Rules applies:

(a) where the asset is one in respect of which any deduction had been allowed to that person under the provisions of article 14(1)(f) and (j) of the Act, no deduction shall be allowed in respect of the provision of the said fringe benefit: provided that in the balancing statement required for the purposes of article 24 of the Act -

(i) where the said asset has been transferred at no consideration it shall be treated as having been put out of use for no value; and

(ii) where the said asset has been transferred at a consideration it shall be treated as having been sold for that consideration, and a balancing allowance shall be allowed or a balancing charge shall be made accordingly;

(b) where the asset is one in respect of which no deduction had been allowed to that person under any of the provisions of article 14(1)(f) and (j) of the Act, the deduction in respect of the provision of the fringe benefit shall not exceed the cost at which the provider of the benefit had acquired that asset, including any costs incurred by the employer in transferring that asset: provided that any consideration paid by the beneficiary shall constitute income in the hands of the employer;

(c) where the transfer is one which falls within the scope of the provisions of article 5 of the Act, no deduction shall be allowed under the provisions of article 14 of the Act in respect of the provision of the fringe benefit: provided that the gains or profits derived from the said transfer shall be determined in accordance with the provisions of the said article 5 without reference to the value of the fringe benefit.

(4) For the purpose of this rule emoluments shall not be deemed to have been duly accounted for except to the extent that their value has been correctly reported in the Payee Statement of Earnings and the Payer’s Annual Reconciliation Statement prepared in terms of the FSS Rules with respect to the relevant year and furnished to the Commissioner by not later than twelve months after the relevant time limit prescribed under the said Rules.

(5) When a person pays emoluments to his or her spouse, such emoluments are allowable as a deduction in accordance with the provisions of article 14(1) of the Act, as long as such person complies with the requirements of sub-rules (1) and (4) of this rule and the spouse receiving the said emoluments has paid social security contributions on the basic wage or salary received.