We continue the advice series from U-LEAD experts Iryna Drozd and Tetiana Larikova.
Learn recommendations to budget institutions regarding the initial recognition of green spaces here and advice on accounting of green plantings after initial recognition here.
To find out when a centralised accounting system should be created and how to organise it best, click here:
If you are interested in recommendations for municipality institutions on the specifics of fixed asset accounting, please visit here.
The experts also talked about the specific aspects of accounting and stock assessment in budget institutions.
If you are wondering how to formalise liability for material assets for the period of leave of the financially liable person, check out our article here.
Cash assistance (CA) refers to financial support or non-targeted charitable assistance to employees of budgetary institutions. It is paid by the employer at the request of the employee.
Cash assistance can be regular or one-off.
In accordance with the Guidelines on Salary Statistics: Order of the State Committee of Statistics of Ukraine No. 5 dated 13 January 2004 (hereinafter Guidelines No. 5 dated 13 January 2004), regular cash assistance provided to all or most employees (as health/environmental benefits) should be included in the payroll fund as part of other incentives and benefits.
A one-off cash assistance granted to individual employees due to family circumstances, to pay for their treatment, as health benefits for children or for a burial should not be included in the payroll fund.
Cash assistance granted as social and household benefits is considered to be a non-targeted financial aid paid from the payroll fund, and the Law of Ukraine “On Service in Local Self-Government Bodies” does not establish separate grounds for its payment.
The following categories are entitled to receive cash assistance:
- officials of budgetary institutions of local self-government and civil servants as prescribed by Decree of the Cabinet of Ministers of Ukraine No. 268 “On Streamlining the Structure and Conditions of Remuneration of Employees of Executive Bodies and Institutions, Prosecutor’s Offices, Courts and Other Bodies” dated 9 March 2006 (hereinafter CMU Decree No. 268 dated 9 March 2006);
- service workers employed by budgetary institutions of local self-government as prescribed by Order of the Ministry of Economy No. 609 “On the Conditions of Payment of Service Workers Employed by Executive Authorities, Local Self-Government and Executive Bodies Thereof, Prosecutor’s Offices, Courts and Other Bodies” dated 23 March 2021 (hereinafter Order of the Ministry of Economy No. 609 dated 23 March 2021).
In accordance with CMU Decree No. 268 dated 9 March 2006, managers of budgetary institutions are empowered, within the limits of the approved payroll fund, to grant cash assistance to employees as social, household or health benefits when granting annual leave in an amount that does not exceed the average monthly salary of the employee (monthly financial support of military personnel, senior officials).
That is, the above types of cash assistance (provided as social, household or health benefits) for officials and employees of local self-government are regular, since they are provided to all employees and included in the payroll fund.
Taxation of regular cash assistance is equated to salary and the total amount of the assistance should be included in the total monthly taxable income of the taxpayer and taxed at the following rates: personal income tax (18%), military levy (1.5%) and single social contribution (22% or 8.41% for persons with disability).
Order of the Ministry of Economy No. 609 dated 23 March 2021 empowers managers to provide, within the limits of the approved payroll fund and the maximum number of employees, cash assistance, including health benefits, in the amount of the average monthly salary, except for cash assistance for burial.
That is, for service workers employed by local self-government and its executive bodies, only cash assistance granted as health benefits is regular and included in the payroll fund.
Service workers can be granted both one-off and regular social and household cash assistance. This should be regulated in the Collective Employment Contract.
If the social and household cash assistance is regular and provided to all service workers, it should be included in the payroll fund.
If the social and household cash assistance is provided to individual workers once at the submitted request (due to family circumstances), it is not included in the payroll fund and should be taxed as follows:
- Personal income tax and military levy are not charged within the amount of assistance, which, in aggregate, does not exceed the maximum amount of income for the reporting year, according to para. 169.4.1 of the Tax Code of Ukraine (hereinafter the Tax Code) established on the first day of January of the reporting tax year (UAH 4,240 from 1 January 2024);
- • the excess amount is subject to personal income tax (18%) and military levy (1.5%) (para. 1.7 and 16-1 of Sub-Section 10 of the Transitional Provisions of the Tax Code);
- the cash assistance is not subject to a single social contribution, as it is not included in the payroll fund.
To sum up, any regular cash assistance provided to all or most employees is included in the payroll fund as part of other incentives and benefits and should be taxed on a general basis. A one-off cash assistance provided to individual employees due to family circumstances is not included in the payroll fund and should be taxed in accordance with para. 169.4.1 of the Tax Code.