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Psssst! Here's how that "free" coffee you give your employees might cost them

by , 24 June 2014
You probably have a fully stocked kitchen at work. It's where your employees can go and have a cup of coffee or tea.

You think this is a simple and helpful benefit that keeps your employees alert and functioning. This might be true, but have you ever considered if that 'free' coffee might push your employees' tax up?

With taxable fringe benefits such as meals and refreshment, this is entirely possible. Keep reading to ensure that cuppa doesn't become the most expensive drink your employee has ever had...

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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!

Free food and refreshment are a taxable fringe benefit

According to the Practical Tax Loose Leaf Service, free food, refreshments or meal vouchers are included in the SARS' list of taxable fringe benefits.
The rule with these, as with all taxed fringe benefits, is the rate of tax is 3.5% of the value of the benefit.
Now, you don't have to work out the tax per cup of coffee and keep track of every cup they drink. In fact, if you supply this refreshment to your employees during business hours, it doesn't have any tax on it. 
These company benefits only triggers the tax if you supply this perk outside of business hours. 
There are two more ways you can ensure refreshments like these stay tax-free...
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Two ways to ensure your employees' refreshments stay tax-free 

Your employees won't pay any tax on meals or refreshments if:
1. You provide them in a canteen, cafeteria or dining room that you operate; and
2. If your employees have these meals or refreshments while they're providing a client with the same. 
So bear these rules in mind to ensure your employees' benefits, such as free meals and coffee, don't cost them extra tax. 

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