Did you pay taxes for Housing benefits?
In the enchanting land of Korea, known as Tax-a-Lot, housing benefits once flourished freely, unregulated and unburdened by taxation. However, the winds of change began to stir. In the fiscal year of 2021, a subtle tax amendment slipped in, transforming housing benefits into "Non-taxable income." Yes, you heard it right! These benefits had become potential taxable income for expatriates who were subjected to the flat tax rate of 19%.
At this point, you might be pondering, "This seems more like a tragedy than a comedy!" But hold your horses, because the narrative takes a surprising turn! In reaction to this development, expatriate communities and organizations rallied together like a band of tax-defending champions. Their formidable efforts persuaded the NTS to postpone this amendment until the fiscal year of 2023. Consequently, "Housing benefits" continued to be non-taxable income for wage earners. Cheers to that!
But what are these so-called housing benefits? Allow me to enlighten you. Housing benefits occur when an employer, akin to a fairy godmother, offers a company-owned or leased residence to an employee. This could be a hotel residence, a house, an apartment, an officetel, or even an enchanting treehouse!
The employer must wield their power (or sign a lease contract) and pay the rent directly from their bank account to the landlord according to the contract.
However, if an employee owns or leases a house and their employer pays the rent or any housing allowance, that's when the plot thickens! This turns into taxable income for the employee.
As for utility expenses paid by the employer, this type of benefit will also be considered taxable income for the employee. But caution! It could also be deemed a non-deductible expense for the employer's corporate income taxes. And with that, our exciting journey through the realm of housing benefits and taxes concludes. Until our next tax adventure! Please reach out to me at firstname.lastname@example.org. Have a great day!