You must charge output tax on these EIGHT fringe benefits - here's how
We all think that simple job perks are just that: Simple. But did you know that you should charge output tax on certain fringe benefits, or face penalties from SARS?
Employers often forget this fact, say the experts at the Practical Vat Loose Leaf
. But you don't have to be one of them!
If you award these 8 fringe benefits to SARS, then make sure you charge output tax correctly
There are eight fringe benefits you must calculate output tax on – they are:
1. Rewarding employees for a great service;
2. Goods/services given to relatives of employees;
3. Purchase of an asset at less than actual value;
4. Right of use of an asset;
5. Free meals and refreshments;
6. Free or cheap services;
7. Medical costs incurred by the employer;
8. Motor vehicles given as company cars.
Here'show to calculate tax on fringe benefits
To calculate output tax on the fringe benefit, simply take the amount the fringe benefit costs you and multiply it by the tax fraction 14 /114. This will show you what amount of output tax you owe SARS.
Then declare the output tax amount on your Vat return (in the month you awarded the benefit) in block 12.
When it comes to Vat, ignorance is certainly not bliss! Use this knowledge wisely to keep penalties at bay.