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Easily work out your employee's fringe benefit tax with this simple tip

by , 01 October 2014
If you give your employee fringe benefits, you need to work out his fringe benefit tax. You then need to withhold this tax along with his PAYE at the end of every month and give it to SARS.

To do this correctly and avoid under - or over - taxing him you need to carefully track each fringe benefit you give him.

Otherwise you could trigger the wrath of SARS because of your mistake.

Luckily, we have an easy way for you to track and work out your employee's fringe benefit tax...

 

Here's an easy way to work out all of your employee's fringe benefit tax

 
Create a document with your employee's name and employee number on the top.
 
In the document, create a list of all the fringe benefits you give your employee for his private use. Separate monthly benefits, such as medical aid contributions and company cars, from once-off benefits such as a paid holiday.
 
Next to each benefit write its value. Then apply the 3.5% rule to work out your employee's fringe benefit tax on each benefit.
 
Total up all the tax amounts to find out your employee's total fringe benefit tax for the month.
 
Repeat this every month and only include benefits your employee used that month.
 
Here's why this method will help you work out your employees fringe benefit tax correctly.
 
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Here's why creating this fringe benefit document will help your calculate your employees tax

 
This method of recording your employee's benefits helps you work out his tax because you can see each of the benefits your employee uses privately and, therefore, what he must pay tax on. 
 
This list ensures you don't forget anything and then under-tax your employee, or tax him on something he didn't use. 
 
This simple method will help you get it right every time and avoid SARS penalties later on. 


Recommended Product: Your Fringe Benefits Problem Solver. With 77 answers to your questions.
 

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