Employees As Walking Billboards (Away With Tax on Uniforms Please!)

A few years into my first job, financial  frustrations set in. My days before pay day were spent with other low wage earners hanging around town to check ATMs to see if by chance we had been lucky to get paid ‘early’. The day before payday was one of absolute poverty, so much so that there was often unexaggerated uncertainty about whether we had the means to attend work on the actual payday!

When staff become financially vulnerable, irrespective of their lack of high power earning credentials, a poor performing economy, their own bad money management habits or other personal misdoings, fingers get pointed at the employer. It is the employer that they expect to make things right. In these periods every company effort towards change is treated unfairly and irrationally.

Company uniform policy was for me one of those changes that happened smack in a period of great financial difficulties; it upset me greatly.  Why was I being asked to contribute to something I didn’t ask for? Why should staff pay anything when it is the company that would benefit from uniformity of branding and exposure from multiple brand ambassadors?

The torment got worse as I would move around town only to be referenced by the name of the company. (Who would have thought I would ever miss being called browning or slimmaz!).

I had become a walking billboard!

A three/four person strong movement was born out of this change. We began using the daily low temperature of the air conditioner in our work space as an excuse to add cardigans and jackets to our uniform shirts so we could cover the logo. (Trust me, frustrated workers can think of more ways to hurt a company than to help it, staff frustration is never to be ignored or brushed aside)

I gently discussed the co-spend approach with an administrative manager who defended the company’s request for a contribution with the position that the uniform was also clothing which we would otherwise have to buy. (No one would be buying an Oxford shirt with a company’s name on it)

Many years later, I now realize that a tax provision is likely one of the reasons some companies ask that staff make a contribution towards the procurement of uniforms. For whatever reason (perhaps a helter skelter move to fill a budget gap) the GoJ made the uniform benefit taxable in 1995. So, in addition to purchasing uniforms and paying the associated GCT or paying the uniform allowance incrementally, companies would also have to pay a further tax on the benefit. Why is there a need to tax a uniform benefit!

Even TAJ seems confused on the matter as the inserts below provide conflicting information on whether it is just the PAYE 25% that is to be deducted or other deductions as well.

What amount is exempt for Uniform and laundry allowances?

Uniform $5,739, laundry $3,395 pa. In cases where the employer provides uniform for an employee in the exempt category, subtract the exempt amount from the cost of the uniforms/laundry and tax the  difference which is subject to PAYE and all other statutory deductions. 

https://www.jamaicatax.gov.jm/income-tax-faq               28-Sep-15

Where an employee falls in the exempt category and uniform is provided by the employer, the tax on the benefit is as follows:

Cost of uniform to employer:                    $10,000.00

Exempt amount                                         $   5,739.00

Excess amount (benefit to employee)      $   4,261.00

The benefit is now to be taxed as follows: $4,261 x 25% = $1,065.25

https://www.jamaicatax.gov.jm/employer-s-guide#uniformandlaundry                                                 28-Sep-15

There should be no tax on any uniform. As a matter of fact, the provision of staff uniform should not be treated as a benefit but as a necessary business expense. in the case of the ‘special groups’ their gears are needed to facilitate the kind of work they do in much the same way blinds are needed to moderate the sun entering a building. Where other groups are concerned, uniforms are generally branded which for me speaks advertising and promotions. How are those expenses treated in the general course of a business? How is an outdoor sign treated? It attracts general consumption tax then is treated as an expense which is deductible from earnings i.e. it is not affected by PAYE.

Jamaican small businesses have been noticeably trying their hardest for the past 5-6 years to become part of the uniformed, formal and ‘professional’ society. Pastry shops, restaurants, law offices and even some independent contractors now have branded shirts. The culture and commerce ministries should recognize this shift and promote it by making representation to the TAJ on this matter on behalf of the business community. A more professional looking business sector can motivate a more professional mindset which can play a great role in making Jamaica into that business friendly environment we all desire.

Social consciousness must support economic decisions at every level.

The concern for tax administrators is always evasion but the screen-printing, logo stitching and commercial uniform producing sector is formal enough to facilitate audits if necessary.

If we believe that the newly installed tax collection measures -withholding tax and minimum business tax- will yield the expected results, we should begin to look back and reverse/ amend some of the hurtful moves made in the past.

My hope is that GoJ will see it fit to make the necessary changes in the short term and that companies now asking staff to co-spend on uniforms will begin to foot the full bill and use a uniform policy to manage their spend.

C.E. Clarke for Help Mi Consulting |(c) 2015

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