ETOPS240
As an accountant in my previous life I can assure you the IRD will treat the forgivable loan as income once the iCad has completed six years of service. The company can call it what they like but this will not stop the IRD classing it as a joining bonus and therefore income as it most rightfully is. The only reason they are calling it a gift is to dress it up in the eyes of the potential iCads.
It would simply be better for the company to just pay for the course in Adelaide like they have always done rather than muddying the tax waters for the iCads by giving them a loan when they first start. The only reason they have done this is to try and circumvent the laws in Hong Kong prohibiting bonding and to try and make the cadet scheme appear more attractive particularly to experienced pilots who have been avoiding it in droves. The reality is they desperately need considerably more short course iCads as they simply can’t get the numbers required for their expansion plans through the long course alone. For long course iCads there is absolutely nothing in it for them except a large tax bill after six years.
At the end of the day profit share or a bonus could be called a gift as well but it is still classed as income by the IRD. There is absolutely no difference in the eyes of the IRD when it comes to a gifted loan. It is a joining bonus period and is therefore part of ones assessable income.
If you don’t believe me ask the IRD and/or your accountant.
Bye the way there are no repayments unless the iCad decides to leave before their six year “Return of Service” requirement.