January 26, 2022

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Cash Emoluments Meaning and Key Explanations

Cash Emoluments Meaning and Key Explanations
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Cash Emoluments arised from the need for individual employees in an entity to pay taxes. It is mostly from here employees are assessed for tax. In this article, I will define this term and explain it in detail.

Definition of Cash Emoluments

According to the ICAN study pack on Taxation, cash emoluments are the remunerations an employee receives from the employer in cash. It is the cash based payment to the staff of an entity.
It can also be defined as the gross pay to an employee that is paid in cash.

Key Explanation

Cash does not only mean physical cash. It can mean that it is transferred to the salary account of the employee in a bank. Then, the employee can withdraw from the bank in cash.

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Emoluments may also include benefits-in-kind. But, the focus here is the one received in cash. You should know that both are used to assess the employee on tax, under pay as you earn. More so, they are needed to calculate the consolidated relief allowance.

Examples of cash emoluments are wages, salaries, bonuses, allowances, overtime, payment of debts on behalf of employee, compensations, share of profit (usually called Christmas bonus), premium and any other benefits accrued to the employee.

Many of the aforementioned, are not available on a monthly basis. Share of profit is received by the employee at the end of the year. Bonuses are given to employees for surpassing their quota for the month. Allowances are part of gross pay to employees. And includes medical allowance, transport allowance, housing allowance, and so on.

Differences between Cash Emoluments and Salary

The differences are as follows:

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While the formal is the superset of salary. As you can see from the examples above, salary is part of emoluments received by employees in cash.

Salaries are received on a monthly basis. But other aspects of emoluments are received at one point or the other. For example, a share of profit is received at the end of the year. Bonuses are received only when the employee surpasses its quota for a month.

It is the total cash emoluments that is assessed to tax. Only salary cannot be assessed to tax, unless it both are equal.

Conclusion

To wrap it up, cash emoluments are the remunerations an employee received from his/her employer. Examples here are salary, wages, allowances, etc. Non-cash payments are called benefits-in-kind.

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