How to determine the Value of BIK?
a) The Formula Method
⇒ each benefit provided to the employee is ascertained by using the formula below:
⇒ the prescribed average life span of the various assets is as in Appendix 1
⇒ the benefit can be abated if:
i. Provided for less than a year, or/and ii. Shared with another employee, or/and iii. Used for purpose of the business of the employer.
b) The Prescribed Value Method
⇒ an alternative method to determine the value of the BIK provided by the employer to the employee
⇒ The schedules for the prescribed values of the benefits commonly provided to the employee are as in Appendix 2
⇒ The benefit can be abated if:
i. Provided for less than a year, or/and ii. Shared with another employee
Whichever method is used, the basis of computing the benefit must be consistently applied throughout the period of the provision of the benefit for each unit of asset.
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