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The three elements of a fringe benefit: If it doesn't have these, it's not taxable

by , 26 August 2014
Not all company benefits are taxable, but there are 13 that are.

If you don't have a list of these 13 benefits in front of you, how can you always tell if it's a taxable fringe benefit or not?

The easy way is to check to see if it has any of these elements which make it a fringe benefit. This will ensure you never overtax your employee for something that isn't a taxable fringe benefit. Read on to discover the three elements you must check for...

 

These are the three elements SARS says make up a taxable fringe benefit

 
1. There must be an employment relationship between the person giving you the benefit and the person receiving it. This just means the person you give the benefit to must be your employee or your employee's relative.
 
2. The benefit must accrue to your employee because of his job. It must be a perk as part of his job.
 
3. The benefit you gave your employee must be a reward for services he rendered to you and your company.
 
 
SARS says if the benefit does have these three elements then it IS taxable. The only time there's an exemption on this is if SARS has clearly stated that there's one.
 
So this means you must handle this benefit the right way when it comes to your employee's taxes. So here's what to do.

*********** Hot off the press  ************
 
13 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!
 
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Here's how to handle a company benefit that counts as a taxable fringe benefit

 
Your employee will pay tax of 3.5% on the benefit you give him. You must calculate this amount and withhold it, in addition to his normal PAYE.
 
Now that you know what counts as a taxable fringe benefit ensure you always handle the tax on them correctly.
 

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