Smartphones you give employees for private use are in fact fringe benefits! Use these four tips to calculate it correctly
If there's one question I've seen floating around lately, it's whether or not smartphones, provided to employees for private use, are in fact considered fringe benefits.
Well, if you own or lease them, then the answer is yes, and so you need to make sure you treat them accordingly.
Here are the four tips you need to calculate it correctly...
Use these four tips to calculate the fringe benefit correctly
If you hold the asset under a lease or hiring agreement, you must withhold employees' tax on the amount of the payable rent. For example, this could be data payments to a service provider for a tablet computer.
If the employee is the only one who uses the asset i.e the smartphone, or uses it for the majority of its useful life, then the value of its private use is cost to you. Fully tax the benefit on the date the employee was first allowed to use the smartphone.
If you allow an employee to use an asset which belongs to you in any other situation, tax them 15% per year on either the market value of the asset when they started using it, or the asset's initial cost (whichever is the cheapest).
For employees' tax purposes, divide up the cash equivalent of the asset over the period of time, during the year of assessment, which the
employee uses the asset. For example, if the employee only used the asset for four months, then divide up the total cash equivalent and spread it over the four months.
*To learn more on calculating fringe benefits correctly, as well as what the five tax-free benefits are here, page over to Chapter F 05
in your Practical Tax Loose Leaf Service
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