Currently our company provide health/life insurance for permanent staff but due to health reason, one of our staff could not join the insurance.
Thus, we plan to reimburse him with a medical benefit/allowance, please advise if there will be any issue in terms of tax and accounting for this.
Panwa: For accounting:
1)The company should set and mention the maximum rate of medicine care that the company provided to employees in the company policy.
– If the medicine expense that the company paid for each employee is not more than the maximum that have been set, it shall be considered and recorded as the company’s expense.
– The excess amount of medicine expense that the company paid for each employee is more than the maximum rate that have been set, it shall not be considered and recorded as the company’s expenses.
B. For term of tax:
2)If the company will pay the reimbursement to employees follow the actual bills that the employees spent for their treatment, it shall not be considered as their income for calculation of personal income tax purpose.
3)If the company will pay the medicine expense to employees without the supporting bills (like allowance payment), it shall be considered as their income for calculation of personal income tax purpose.
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