June 2023 to March 2024 exams Watch free ACCA TX lectures
Chapter 9
EMPLOYMENT INCOME 1. The scope of employment income An employee is taxable under Employment Income rules.
A self employed person is taxable under Trading Income rules.
2. Employment -v- self-employment? 1.
The following principles should be taken into account in deciding if a person is employed or
self employed.
The main test of an employment as opposed to self-employment is the existence of a contract
of service
(employee) compared with a contract for services (
self employed ).
2.
You can use the mnemonic
HIS CHORE to help you remember the tests.
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The employee is entitled to benefits normally provided to employees such as sick pay
and
holiday pay .
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The work performed by the employee is an
integral part of the business of the employer
and not merely an accessory to it.
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The employee is obliged to work personally and exclusively for the employer, and cannot
hire his own helpers or send a
substitute .
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The employer
controls the manner and method of the work.
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The employee is committed to work a specified number of
hours at certain fixed times,
and is paid by the hour, week or month.
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An
obligation by the employer to offer work and an obligation by the employee to
undertake the work offered. An employee would not normally be in a position to decline
work when offered.
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The economic reality of self-employment is missing - namely the financial
risk arising
from not being paid an agreed, regular, remuneration. The employee cannot profit from
sound management -
