FINANCE BILL 2002: EXPLANATORY NOTE
CLAUSE 33: EMPLOYER-SUBSIDISED PUBLIC TRANSPORT BUS SERVICES
SUMMARY
This clause extends the existing tax exemption in section 197AB ICTA so that where employees benefit from their employer's subsidy of a bus service by receiving free or reduced price travel there is no tax charge on this benefit. This extension only applies to journeys on local stopping services. It means the tax treatment of employee travel on subsidised local bus services will be the same of that for travel on employer-provided works buses.
DETAILS OF THE CLAUSE
1. Subsection (1) says that this clause amends existing section 197AB ICTA.
2. Subsection (2) clarifies that the tax exemption applies where the home to work journey on the subsidised bus is only part of the employee's door to door journey.
3. Subsection (3) provides that on buses other than local stopping bus services there will be a taxable benefit if employees pay less than the fare paid by other passengers. But on local stopping services this rule is removed, allowing employees to benefit from free or reduced fares without receiving a taxable benefit.
4. New subsection (3A) provides that in all cases for benefits from the employer's subsidy of the bus service to be tax free they must be available to all employees of the employer.
5. Subsection (4) provides for the use of the Section 2 Transport Act 1985 definition of a local stopping bus service..
6. Subsection (5) provides that where there is no tax charge under section 154 (general benefits in kind charging provision) because of section 197AB there cannot be a tax charge under section 141 if a non-cash voucher, such as a ticket, is involved in the transaction between the employee and the bus company.