Summary
Summary Employee Benefits notes
- Course
- Taxation 2 (ACC3004)
- Institution
- University Of Cape Town (UCT)
8 pages of notes on fringe benefits for employees and their relevant tax treatment, including flashcards with quick summaries
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EMPLOYMENT BENEFITS1. Fringe Benefits
*Only taxable on the amount of the benefit that relates to private/domestic use
ASSETS FOR < MV
Asset acquired for less than MV or for no consideration
No Value:
o Fuel or lubricant
o Immovable property IF
MV < R450000
Employee not a connected person
Remuneration proxy < R250000
Value: Amount – Consideration paid by the employee
o General: MV
o Movable asset specifically bought for employee: cost to employer
o Trading stock: lower of cost and MV
o Long service/bravery award: Cost to employer – R5000
RIGHT OF USE ASSETS
Right to use an asset for private/domestic purposes
No Value:
o Incidental to business (at work and/or used by employees in general)
o Equipment or machinery for short periods
o Electronics used mainly for business
o Books, literature, artwork
Value:
Days
o No sole use for majority of UL: 15% x x lower of cost/MV
365
o Sole use for majority of UL: Cost to employer
MEALS AND REFRESHMENTS
Employee provided with meal/refreshment/voucher at less than its value
No Value:
o Provided at work during business hours (canteen)
o Enjoyed by employee when entertaining someone on behalf of employer
Value: Cost to employer – Consideration paid by employee
RIGHT OF USE MOTOR VEHICLES
Right to use motor vehicle for private and domestic use
No Value:
o Available for employees in general
o Not kept at the employee’s residence
o Nature of work requires them to use the vehicle outside of normal working
hours
Value:
o Determined Value: Amount x 0,15 for every year held before use granted
Sale: Cost
, EMPLOYMENT BENEFITS
Lease: Cash Value
Other: MV
o Value of private use:
Maintenance plan: 3,5% x determined value x # months used
No Maintenance plan: 3,25% x determined value x # months used
Lease: cost of rent + cost of fuel by employer
o Less Business Reduction:
Business KMs
Value of Private use x
Total KMs
Employee incurred costs of maintenance/fuel/insurance:
Deemed cost of fuel/km x private KMs
Private KMs
Cost of license/insurance/etc x
Total KMs
VAT for employer:
Employee pays consideration of R150 per month for the ROU vehicle
Rental of R150 Output VAT: 150 x 15/115 x 12
Taxable benefit
- Not input denied: [(Cost exclusive of VAT x 0,6%) – (rental – R85)] x 15/115 x 12
- Input denied: [(Cost exclusive of VAT x 0,3%) – (rental – R85)] x 15/115 x 12
Fuel costs incurred
- Zero-rated therefore no VAT
RIGHT OF USE ACCOMODATION
Residential or Holiday accommodation provided to employee for no consideration or
consideration below rental value
No Value:
o Employee is away from home by reason of employment
o Non-resident provided accommodation but away from home for < 2 years
Value: Rental Value – Consideration paid by employee
1. Residential:
- Rented: lower of cost of formula
- Owned: formula
2. Holiday:
- Rented: cost
- Owned: rental rate
VAT for employer:
- Residential accommodation is an exempt supply
- Holiday accommodation is entertainment as defined and thus input denied
FREE/CHEAP SERVICES
No Value:
o Business of transporting by air, sea or land
o Transport service between home and work
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