Part 6: The fringe benefits you didn't know about and how to declare Vat on medical costs you incur
Are you paying for your employee's medical costs as a benefit of his employment?
SARS says when you give your employee a reward for his services (pay for his medical bill), this reward is a fringe benefit!
You must calculate and declare the Vat on this fringe benefit to SARS or face up to 200% penalties, and interest!
Read on to find out how to declare Vat on this fringe benefit correctly and stay on SARS good side.
12 Taxable fringe benefits - are you taking advantage of all of them?
Declare Vat on medical costs you incur on behalf of your employees
Let's look at an example of how to do this.
The Gold Mining Co has a company policy where they provide free medical tests and free antiretrovirals to their staff.
At the end of the tax
period, they calculate the value of the medical examinations and medication. It came to R100 000.
The Gold Mining Co must pay output tax
on the R100 000 by applying the tax
fraction to the amount of R100 000.
So they work it out as follows:
R100 000 x 14/114 = R12 280.00
The Gold Mining Co must pay R12 280 output tax
over to SARS!