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Tax-free benefits to your employees: Do these include free meals, refreshments or meal vouchers?

by , 24 March 2015
Do you provide your employees with meals, refreshments or vouchers in kind?

Do you give these free of charge or for a consideration less than the value of such meal, refreshment or voucher?

If so, is this tax free or not?

Read on to discover the answer

When it comes to tax deductions, you need to know know what should be considered a tax-free benefits to your employees.

When it comes to food, refreshments and meals vouchers, you must tax this as a fringe benefit. The value placed on such meal, refreshment or voucher is its cost to you.

Provide these three tax-free benefits to your employees

Keep in mind that there's no fringe benefit tax on any meal or refreshment if:

1) You supply to your employees in any canteen, cafeteria or dining room operated by you or on your behalf.

2) You supply to your employees during business hours or extended working hours or on a special occasion.

3) Enjoyed by your employee in the course of providing a meal or refreshment to any client the employee's required to entertain on your behalf.

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And here's another aspect of tax deductions youcan apply that to free or cheap services.

Keep in mind that a taxable fringe benefit arises where, at your expense, you render any service (other than a medical service) to an employee for his private or domestic use without consideration.

Here's an example:

Sipho is a company executive, working for Big Time Ltd. He's entitled to play golf at a leading golf course, privately, with up to three companions, by means of his employer's corporate membership of the golf club.

He'll be taxed on the free service provided to him for private purposes. The cash equivalent of the taxable benefit is the cost of rendering the service to the employee, less any consideration given by him.

In that respect, here are four tax-free services for your employees

If you offer the following services, they're tax-free:

• A service rendered to your employees at their place of work for the better performance of their duties; or
• Any communication service provided to your employees if the service is used mainly for the purposes of your business as employer;
• A service rendered as a benefit to be enjoyed by them at the work place; or
• A service rendered for recreational purposes;
• A place of recreation provided for the use of your employees in general.

Useful tip: Spoil your employees and ensure the service provider you employ performs the service at the work place. This way no taxable fringe benefit accrues.

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Sandra Jordaan 2015-03-26 11:58:45

A friend of my asked me the following as he was offered a new position at a company and he received a dummy payslip.:

The employee is paying him month a Basic Salary as well as Performance Bonus and is saying that they are doing it for tax purpose and that he will be Taxed less and said to him that he will still receive a 13th cheque in November 2015

Payslip Info Example:
Basic Salary R21 000.00
Performance Bonus R 1 700.00
Uniform Allowance R 45.00
Total Earnings: R22 754.00

PAYE R3 369.25
UIF R 148.72
Provident fund 5% R1 050.00
Total Deductions: R4 567.98

I would like to know if this is correct practice by the company to show the Performance Bonus as a Income every month on his payslip and still it looks like he is tax more than what it should be the norm is that employees add your Performance Bonus to your Basic Salary and tax you then in total.


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