In terms of the Seventh Schedule, the following fringe benefits which are provided to an employee or the holder of an office for a consideration less than the actual value or cost, give rise to a taxable benefit:
Kindly note that this is a broad summary of fringe benefit taxation,
- The acquisition of an asset
- Right of use of an asset (other than residential accommodation any motor vehicle)
- Meals, refreshments or vouchers for such
- Free or cheap services
- Use of residential accommodation*
- Interest – free or low – interest loans
- Housing loans or subsidies
- Payment of an employee’s debt or release from such obligation
- Private use of an employer – owned motor vehicle (company car)
- Value placed on private use of a motor vehicle has been increased to 3.5% (from 2.5%) of the determined value of the motor vehicle including VAT but excluding finance charges and interest
- There’s no relief if an employee gets travel allowance
- Contributions to a medical aid scheme
- Where the vehicle isthe subject of a maintenance plan when the employer acquired the vehicle the taxable value is 3.25% of the determined value
On assessment further relief is available for the cost of licence, insurance, maintenance and fuel for private travel if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a logbook.
In addition, certain other perks are also treated as a taxable benefit:
- Where the recipient is obliged to spend at least one night away from his/her usual place of residence on business and the accommodation to which that allowance or advance relates is in the Republic and the allowance or advance is paid or granted to pay for:
- Meals and incidental cost, one amount of R303 per day is deemed to have been expended
- Incidental costs only, an amount of R93 for each day is deemed to have been expended
- Travelling allowances not used for business travel
- Where the accommodation to which that allowance or advance relates is outside the Republic and that allowance or advance is paid or granted to defray the cost of meals and incidental cost, a specific amount per country is deemed to have been expeded. Details of these amounts are published on the SARS website under Lega&Policy / Legislation/ Regulations and Government Notices / Income Tax Act.1962. This allowance only applies to continuous periods not exceeding 6 weeks away from home.
Official rate of interest
As from 1 March 2011 the amount taxed is the difference between interest payable on the loan by die employee and the repo-rate +1%. No benefit is placed on a casual loan to an employee up to R3000 or a study loan to enable the employee to further his own studies.