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13 Taxable fringe benefits you need to know

by , 24 March 2016
Before you go ahead and reward an employee for their long service, you must know whether or not it's a taxable fringe benefit.

In other words, if it is in fact a taxable benefit, then you must hold back and deduct the appropriate amount from the employee's tax.

If you fail to do this, you'll face harsh penalties from SARS. So pay attention!

Here are 13 fringe benefits which you simply must tax your employees on. But first, let's take a look at what exactly SARS defines a fringe benefit as...

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What is a fringe benefit?

SARS defines a fringe benefit as comprising all of the following 3 aspects…

Aspect#1: There's an employment relationship between the person giving the benefit and the person receiving it.

Aspect#2: The benefit increases over time because of an employee's employment. In other words, it's a 'perk' of his job.

Aspect#3: The benefit must be a reward for services provided (or which will be provided) by an employee.
 

Now that you know what a 'fringe benefit' actually is, let's look at which of them are taxable…

There are 13 taxable fringe benefits. They are if you:

1. Give the employee an asset for free, or for a price lower than its actual value;
 
2. Allow the employee to use assets which you own. This excludes company cars;
 
3. Give the employee a company car for him to use privately;
 
4. Provide the employee with free meals, refreshments or meal vouchers;
 
5. Provide the employee with cheap or free accommodation, or allow him to purchase a place to stay, which you own, for an amount lower than the place's market value;
 
6. Pay the employee's medical aid contributions for him;
 
7. Pay for his medical expenses;
 
8. Put money towards the employee's insurance policy;
 
 

*To learn what the other 5 taxable fringe benefits are, simply page over to Chapter F 05 in your Practical Tax Loose Leaf Service handbook.

PS: It's also worth noting that many of these fringe benefits have special rules and exceptions in certain situations. So head over to Chapter R 05 now and get cracking!

Remember that you simply can't afford to risk being penalised by SARS because of your lack of tax knowledge around fringe benefits.

So if you don't already have this very useful tax resource, click here to order yours today and from there on out have the peace of mind knowing that you're on top of all important tax issues in South Africa. 

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