Accountable plans can cut the tax on reimbursements

Article Abstract:

The tax treatment of employee business expenses depends on whether the employee expense reimbursement and allowance arrangement is an accountable or nonaccountable plan. Employee business expenses are treated as taxable compensation if they are not sufficiently proven as being accountable plans. There are three tests that a plan must meet in order to be considered as accountable. One is that the advances, allowances or reimbursements must be provided only for the types of expenses that are deductible and must have been given in relation to the performance of services as an employee. The second test requires the substantiation of the business expense within a reasonable period through documentation. The final test determines whether or not the plan requires an employee to return amounts exceeding substantiated expenses.

Methods, Expense deductions

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Sharing in the profits

Article Abstract:

The Community Maintenance Services (CMS), Strathkelvin District Council's labor association shares its profits with its staff and community. CMS profit-sharing scheme provides for the equal distribution of net earnings among the staff, the community and the firm itself. Employees' profit share will depend on length of employment, attendance and productivity.

Evaluation, Profit sharing

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