Good news: If an employee benefit fulfils this purpose, there's no fringe benefit tax
Let's say your employee has to travel a lot for business. You pay for his accommodation because it's only fair. If you're worried all this accommodation you have to pay for is going to result in tax for your employee. We have good news for you!
It's a tax-free benefit.
That's right, this benefit, like some other, isn't subject to fringe benefit tax.
The reason? Because it's purely for business purposes. Let me explain...
If your employee only uses the benefit for business purposes it's tax-free
The accommodation you pay for when your employee goes on business travel is purely so he can do work for your company.
This means it's not a company benefit, your employee's use is for personal gain.
This is the main distinction between a tax
-free and a taxable fringe benefit.
If your employee uses a benefit for his private use he'll pay fringe benefit tax
If your employee goes on that business trip but then decides to stay there for a few extra days of leave and you pay for the accommodation for those days, it's a taxable fringe benefit.
This means he'll pay tax
on 3.5% of the value of the accommodation.
The line between business and private use applies for pretty much every employee benefit. So while you can give your employees those private use perks just be sure to warn them that they'll incur extra taxes.
But for those purely business purpose benefits you don't have to worry about them costing your employee any extra tax
PS. Stop forking over thousands of unnecessary cash to SARS!
Be one of the first in the country to get access to the information that'll make sure you pay the least tax
You can legally save your company thousands of rands in taxes on forgotten fringe benefits.