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Over taxed employees are unhappy ones! Here's how to avoid this

by , 15 August 2014
No one likes paying tax, whether it's the boss or employees. And if your employees suddenly check their payslips and find that they're paying extra tax, they'll be furious.

But this extra tax often comes from taxable fringe benefits.

The shock happens when employers give their employees benefits without warning them of the extra tax.

And when their employees look at their payslip, they don't understand why SARS is getting even more of their money.

Here's what you can do to prevent your irate employees lashing out at you...

 

The first step to avoid irate and over taxed employees is to avoid private use perks

 
The rule of fringe benefits is if your employee uses the benefit for his own personal gain he must pay fringe benefit tax on it.
 
So if your employee doesn't want to deal with extra taxes you can simply avoid giving him these benefits.
 
Stick to the benefits your employee uses purely for business. These are generally tax free and your employee needs them anyway.
 
But if your employee wants a personal benefit, here's what you must do.
 
*********** Hot off the press  ************
 
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!
 
*************************************
 

If your employee wants a personal benefit, warn him of the tax first

 
If your employee doesn't expect the extra tax, of course he's going to get upset about it. But if you warn him, it won't come as a shock.
 
Rather explain to your employee that he must pay tax on 3.5% of the benefit's total value. Work out the amount of tax, show your employee and ask him if he still wants the benefit.
 
That way, he won't suddenly be alarmed and confused by the missing money. So never forget to communicate with your employee on these matters or it may lead to an ugly blow out.
 


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