What is an Imputed Income?
Impute refers to non-cash benefits or extra perks (Like a club's membership or company's car) that are not a part of the employees' salary but as they have a monetary value they can be considered as the employees' income for tax purposes.
Examples of Imputed Income:
- Personal use of a company car
- Group-term life insurance
- Gym memberships and fitness benefits
- Use of a company or employer car
- Dependent care assistance
- Adoption assistance
- Educational assistance and tuition benefits
- Moving expense reimbursements
- Occasional employee gifts, including cash and gift cards
Also read: What is Evidence of Insurability (EOI)?
Examples of Exclusions to Imputed Income:
Certain benefits, known as "de minimis benefits," are excluded from being counted as imputed income. These benefits are provided to employees, contractors, or other workers in non-cash forms and hold nominal value.
Examples of de minimis benefits may include:
- Small, infrequent gifts
- Occasional personal use of a company vehicle
- Occasional snacks or office supplies
- Occasional meal allowance or transportation money for working overtime
- Personal use of a cell phone provided by an employer primarily for business purposes
In both the UAE and Saudi Arabia, similar principles of imputed income apply. Any non-cash benefits provided by an employer that have monetary value are considered part of an employee's taxable income.
This includes items like accommodation, company cars, and other perks. Both employers and employees in these countries need to be aware of imputed income regulations to ensure compliance with tax laws.
Understanding how it is calculated, reported, and taxed is crucial for both employers and employees to remain compliant with tax regulations.
