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Here's how to accurately calculate output tax on your employees' fringe benefits

by , 13 November 2014
As a Vat vendor, it's your duty to declare all your company's output tax. This includes your employees' fringe benefits.

If you don't, SARS will audit your company and will charge you hefty penalties.

This could cost your company dearly!

To ensure it doesn't happen to you, we're revealing how to accurately calculate the output tax on fringe benefits so you declare it to SARS...


Here's how to determine if you gave your employee a taxable fringe benefit 

To determine if you gave an employee a taxable fringe benefit, check if it meets these SARS' four requirements:
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.
3. The benefit is a reward for services rendered by the employee.
4. You taxed the benefit, even if you didn't grant it directly.
If the benefit ticks all four boxes it's a fringe benefit. Alternatively, if the benefit falls into one of these eight categories [link] it's a fringe benefit. And that means, you must pay output tax on it. Here's how…
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Do you know how to:
•         Avoid a Vat Audit?
•         Claim every input tax credit?
•         Get your refund from SARS quicker?
You should. And you can. By reading this letter, it will tell you how to avoid costly Vat mistakes, save you money, time and be your CEOs favourite person when you save the company R1 000s of rands in Vat refunds this year.

Do this to accurately calculate fringe benefit output tax and declare it to SARS

Take the value of the fringe benefit and multiply it by the tax fraction 14 /114. This will show you the amount of output tax you owe SARS.
You must then declare the output tax amount on your Vat return (in the month you awarded the benefit) in block 12.
If you need more information on how to calculate the Vat on employees' fringe benefits, check out the Practical Vat Loose Leaf Service. It contains everything you need to know to do this correctly and avoid penalties.

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