Holiday Journey Benefits
Taxable Holiday Journeys
Any amount paid by your employer in connection with a holiday journey is taxable. A "holiday journey" is defined as either "a journey taken for holiday purposes" or "where a journey is taken for holiday and other purposes, the part of the journey taken for holiday purposes". This includes school passage allowances and related benefits (baggage and travelling expenses) and long service travel awards. The taxable amount includes expenses for air, land or sea transportation, accommodation, meals, sightseeing tours, travel insurance, and visa fees, etc. paid or reimbursed by your employer.
Journeys for Both Business and Holiday Purposes
If you take a journey partly for business and partly for holiday purposes, the Inland Revenue Department (IRD) will consider its immediate purpose. If your holiday is merely incidental to a business trip, the IRD will not tax the benefit. If your business dealing is merely incidental to the holiday journey, such as if you visit a business contact while on the way, your whole journey will be treated as being for holiday. However, in cases where a clearly identifiable part of your journey is taken for holiday purposes, your expenses paid or reimbursed by your employer relating to that part of the journey will have to be determined and included in your assessable income.
Distinct and Separable Business and Holiday Expenses
If your journey is for both business and holiday purposes and the expenses relating to the holiday journey are distinct and separable (such as accommodation costs for extra nights spent on holiday), those expenses will be assessed. If your expenses are not entirely distinct and separable, an apportionment based on the "holiday-days basis" will generally be adopted and assessed as such. The total amount spent for the combined journey times the number of days spent on holiday will be divided by the total number of days in the journey. In either case, the cost of the air ticket will not normally be considered assessable because it would have been incurred regardless of the holiday element of your journey.
Group Holiday Journeys Organised by Your Employer
If your employer organises a group holiday journey, such as a one-day local tour for you and other employees, and the amount your employer pays is not distinct and separable for each employee, the Inland Revenue Department may assess the portion spent on each employee as a percentage of the whole group.
First Appointment Passage and Home Journey Taken Immediately After Termination
If you receive a first appointment passage or take a home journey immediately after the termination of employment in Hong Kong, it will not be considered as a holiday journey and is not taxable.
Your employer must monitor its record keeping system to ensure that the taxable benefits for each employee can be properly reported in its Employer’s Return of Remuneration & Pensions:
- IR56B (annual reporting);
- IR56F (termination of employment); and
- IR56G (termination of employment and leaving Hong Kong).
As an employee you are required to report all taxable holiday journey benefits under item 4.1(1) "Total Amount" on the Tax Return – Individuals (BIR60).
More information on holiday journey benefits and how such benefits are taxed is available through the following links.Frequently asked questions about holiday journey benefitsDepartmental Interpretation and Practice Notes No. 41: Salaries Tax: Taxation of Holiday Journey Benefits