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Can you give your employee rent-free, tax-free accommodation?

by , 14 August 2014
As an employer, you may often feel that your responsibility to your employees extends beyond just paying their salaries.

You may feel the need to provide them with those help extras like cars and accommodation. But these company perks come with tax - fringe benefit tax to be exact.

The good news is you can actually provide your employee with rent-free and tax-free accommodation in this one situation...


Here's when your employee won't pay tax on the rent-free accommodation you provided him 

If your employee has to travel and be away from home so he can do work for you and you provide him with free accommodation, he won't pay tax on it. The reason is this isn't necessarily a benefit as you're simply enabling your employee to perform his work duties.
Just remember that only resident employees qualify for this tax exemption. 
So ensure you distinguish between your employee's business travel and travel for leisure. 
Here's how to do that...
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If your employee's travel appears to be private he'll lose the tax exemption

If your employee travels for business, he won't need more than one room or residential unit. If you pay for him to have more than this, It'll seem like private travel. 
He'll lose his tax exemption and have to pay fringe benefit tax on the accommodation.  
There you have it. It's possible to give your employee rent-free and tax-free accommodation if he travels for business. Just don't cross that line between private and business travel.

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