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Zuma could owe SARS R16.8 million for Nkandla fringe benefits! What about you?

by , 27 March 2014
The Democratic Alliance wants President Jacob Zuma to account for R16.8 million for the fringe benefits he received when the state paid for security upgrades in his Nkandla home. The DA's call comes after a report by the Public Protector, which found that Zuma unduly benefited from the upgrades. This controversial issue has cast the spotlight on fringe benefits. Continue reading to find out what you need to know about fringe benefits in your company...

Zuma could owe millions for Nkandla fringe benefits

Eye Witness News reports that the DA's calculations are based on Public Protector Thuli Madonsela's findings that items such as the cattle kraal, chicken run, swimming pool, amphitheatre and visitor centre had nothing to do with security.

'In her final report released in Pretoria last Wednesday, the protector recommended Zuma pay back some of the money spent on non-security features.'

And now the DA wants Zuma to pay back money spent for his private benefit and has asked SARS to investigate.

In a City Press report, the DA's finance spokesperson Tim Harris says: 'We believe the president should repay the full amount spent for his private benefit. But even if he only pays the R10.6 million specified by public works, the excess – as a fringe benefit – would trigger a liability of R16.8 million in tax payable.'

The party says it's crucial that the President account for the fringe benefits, especially considering that last month finance Minister Pravin Gordhan said all South Africans, from the president to ordinary workers, are liable for tax on their income and fringe benefits.

And that's why, if you want to stay on the right side of the law, you need make sure you know what fringe benefits are…

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Here's what you need to know about fringe benefits

Experts at the Accounting & Tax Club say that SARS sees a fringe benefit as having four these elements:

  1. There's an employment relationship between the person giving the benefit and the person receiving it.
  2. The benefit accrues to the employee because of his employment. It's a perk of his job.
  3. The benefit must be a reward for services rendered (or to be rendered) by the employee.
  4. The benefit is taxed, even if it was granted by an associated institution, rather than the employer directly.

The most important thing you need to know about fringe benefits is that SARS requires you to declare output tax on any fringe benefits you award to your employees.

If you fail to do this, the taxman will charge you penalties and interest, calculated all the way back to when you first made the mistake.

Now that you know about fringe benefits, make sure you comply with tax law. As for the DA's call for the president to account for fringe benefits, it'll be interesting to see what SARS does regarding this issue. But judging from previous events, no one is untouchable in SARS' eyes.



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