When the financial secretary Antony Leung delivered his first Budget speech in March 2003, he proposed to take away the exemption of holiday passages enjoyed under salaries tax. Initially, the first draft of the Bill merely repealed the provisions governing the exemption of holiday-passage benefits reimbursed by an employer. If an employer instead of reimbursement of an employee's holiday-passage expenses directly provided the benefits, such benefits were still exempt from tax under the principle of not being able to convert the benefit into cash. However, the Bill was subsequently amended to the effect that holiday passage benefits provided by an employer by whatever means are taxable under employees' salaries tax. If the holiday journey is partly for work purposes and partly for holiday purposes, the part for holiday purposes is taxable. The Legislative Council passed the law on June 25 2003, and the law takes effect from the year of assessment 2003/04.
August 31 2003
