When you receive a salary from a company, it typically comes with taxes and four social insurance contributions that reduce your net income as your salary increases. However, there are a few salary components classified as non-taxable under the Income Tax Law. These items are exempt from both taxes and social insurance deductions. Today, I will explain three such non-taxable items and the conditions under which you can apply them.
1.Meal Allowance (~200,000KRW)
When a company does not provide meals to employees and does not reimburse them for meals (meaning employees cover their own meal expenses), up to 200,000 KRW per month can be considered as non-taxable income.It was up to 100,000 KRW until last year, but changed to 200,000KRW from this year
While this amount will be reported on the payslip, it remains non-taxable, meaning it is not subject to taxes or social insurance deductions.
2.Subsidy for use of private vehicle (~200,000KRW)
When employees use their private vehicles for company business, it is common for the company to provide compensation for the expenses incurred. The company can either reimburse employees based on the actual expenses supported by receipts submitted by employees or offer a fixed allowance for private vehicle use.
When a company provides employees with a fixed amount as compensation, this amount can be considered non-taxable, up to 200,000 KRW per month. While this amount will be reported on the payslip, it remains non-taxable, meaning it is not subject to taxes or social insurance deductions.
Here are a couple of important considerations to keep in mind when your company applies for this benefit.
1.Private Car Use for Commute:
When employees use their private cars for their daily commute, this is not considered as company-related work.
2.Car Ownership Requirement:
To be eligible for the non-taxable subsidy, the private car must be registered under the employee's name. joint ownership with a spouse or partner is acceptable. If the car is registered under another person's name, it is not eligible for the non-taxable benefit.
3.Chilecare allowance (100,000KRW)
When an employee has a child under the age of 6, the company can provide a childcare allowance to support the employee's childcare needs. This childcare allowance, up to 100,000 KRW per month, is considered non-taxable.
While this amount will be reported on the payslip as other non-taxable items, it remains non-taxable, meaning it is not subject to taxes or social insurance deductions.
Thank you for read my article! I hope it helps.
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