If you're not claiming these 12 fringe benefits...You're paying SARS more than you have to!
Fringe Benefits are a major bone of contention for many businesses. Should you give more benefits and tax your employee? Or is it better to give allowances?
If you decide to go the fringe benefit route, they are the easiest way to save your employees money. But calculate it wrong? It's the easiest way to cost your company money in penalties to SARS.
There are 12 common fringe benefits you have to tax your employees on but many companies don't. With the help of David van Niekerk, tax expert and contributor to the Practical Tax Loose Leaf, we take a look at four of the 12 different types of fringe benefits.
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!
Four types of fringe benefits you must tax your employees on
When you give your employees free meals, refreshments or meal vouchers.
Do you give employees free meals? If so, you must tax this as a fringe benefit. The value of this perk is what it costs you to buy. There are some exceptions to this rule, like if the food is provided in your own in-office canteen or cafeteria, or was for a business lunch with a client.
Provide free or cheap accommodation for the employee
If you give your employee residential accommodation either free. Or, if you rent it to him for less than the true rental value, it's a taxable fringe benefit.
The cash equivalent of the taxable benefit is the rental value of the accommodation less any rent the employee pays.
It also includes the value of any household goods you supply with the accommodation (e.g. furniture) as well as the electricity.
Let's look at the other two...
Stop forking over thousands of unnecessary cash to SARS!
Instant access to the information that'll make sure you pay the least tax possible...
You can legally save your company thousands of rands in taxes on forgotten fringe benefits.
Two more fringe benefits you must tax your employees on
If you pay an employee's debt on his behalf
Your employee owes a third party money. You pay it on his behalf but you don't ask him to pay you back. This is a taxable fringe benefit.
If you give your employees free or cheap services
If you give employees service for his private use, without charging him, then it's a taxable fringe benefit.
Keep these handy. You never know when you'll need them. Who knows maybe you'll be the hero in your company if you can save you company from a 200% tax penalty from SARS.
Until next time
Managing Editor: The Practical Tax Loose Leaf
PS. For the other eight taxable fringe benefits, turn to chapter F05: Fringe benefits. If you don't have a copy yet, get yours now.
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