HomeHome SearchSearch MenuMenu Our productsOur products

If you give your employees free services, find out whether or not they're a taxable fringe benefit

by , 05 August 2014
A fringe benefit is a perk your company gives to an employee for the performance of services.

If you want to handle fringe benefits correctly and avoid penalties, it's important to know the type of perks that attract tax and those that are tax free.

Continue reading to find out if the free services you give to your employees are taxable fringe benefits.

 

*********** New  ************
 

Confidential: 13 Vat secrets SARS doesn't want us to publish

These secrets will give you insider information on how to red-flag potential Vat risk areas, before the SARS team does.

Click here to find out what they are

*****************************
 

Giving employees free services is a taxable fringe benefit


The Practical Vat Loose Leaf Service says if you provide your employee with any service (other than medical services) for his private use, without charging him, then it's a taxable fringe benefit (Paragraph 10 read with 2(e) of the Seventh Schedule of the Income Tax Act.)
 

Here's an example: Sipho is a company executive, working for Big Time Ltd. He receives the following benefit from the company:
 

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.
 

Here the bottom line: Giving free services to your employees is a taxable fringe benefit. So make sure your payroll withholds and deducts the correct amount of employees' tax – it's the only way to avoid SARS penalties.
 

If you want more information on this issue, for example, which perks are taxed and how they're taxed, etc, check out the Practical Vat Loose Leaf Service so you can take control of your taxable fringe benefits and never make the errors that will attract penalties.




Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>