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Fringe benefits - A blessing or a curse?

by , 17 June 2014
Fringe benefits are always a talking point. Some people argue they're helping their employees, others say you're just forcing them to pay more tax.

At the end of the day, there are pros and cons to fringe benefits. It's up to you to decide if they'll help your employees or not.

To help you weigh up the options, we've outlined some of the benefits and disadvantages for you...

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12 Taxable fringe benefits - are you taking advantage of all of them?
 
There are hundreds of companies out there that don't know which fringe benefits are taxable or they land up taxing the wrong percentage on them... 
 
This kind of error could cost you thousands in penalties to SARS if it catches you out – and it will!
 
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The pros of fringe benefits

Fringe benefits can be extremely helpful to your employees. Let's say, for example, you pay medical aid contributions for your employees. They may not normally be able to afford a good medical aid themselves. So this benefit can really help them. 
 
Costly fringe benefits can often do exactly this. They enable your employees to make use of services they wouldn't have had access to before. And the amount of tax they'll pay on the employee benefit will be far lower than if they had to pay for the service themselves.
 
But this doesn't mean all the possible fringe benefits can offer your employees this kind of help. So what are the cons?
 
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The cons of fringe benefits

There are 12 taxable fringe benefits. All of them will add extra tax onto your employees' income tax. Where big benefits can be useful for your employees, others may just make them pay more unnecessary tax. 
 
For example, if you feed your employees at work, it pushes up their tax. If your employees can and are happy to bring their own food, then you're simply making them pay more tax on a service they don't need.
 
If you're going to give your employees a company benefit, discuss it with them. See if it'll really benefit their lives and their finances. It all comes down to what your employees need and how you think you can help them.
 

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