give
Last week we looked at "residential and holiday accommodation" you are
given as a benefit by your employer and how it is valued for tax purposes.
Now let`s see what happens when your employer sells you company property -
for example a computer - at prices that are lower than the market value of
the item.
In other words, you buy (as opposed to using) an asset from your employer.
You should remember that fringe benefits that are taxable in your hands
arise as a result of your employment.
Benefits that arise from your negotiations with third parties who have
nothing to do with your employer are not taxable fringe benefits in your
hands.
To clarify this: If your employer gives you a credit card for you to spend
on behalf of the company, those expenses are clearly business expenses and
will not be taxed in your hands.
However, any purchase that you make for your domestic use (groceries, for
instance) will be included in your remuneration for that month.
If your employer buys a fleet of cars (or any other thing) and obtains a
bulk discount, and later sells you one of the cars at the discounted price,
the discount will be taxed in your hands.
But, if you negotiated with the car seller independently of your employer,
that discount will not be taxable in your hands.
If your employer provides you with a holiday trip to the Congo for having
achieved performance targets, clearly that trip arose as a result of your
employment and is not something that you arranged yourself, so it will
unfortunately be taxable remuneration.
In short, you will be taxed on the market value of any asset or favour that
you obtain from your employer but there are exceptions:
* If your employer buys an asset specifically to give it to you, you will
be taxed on the cost of the asset to the employer;
* If your employer gives you something that is used to trade (stock), only
the lower of the market value or the cost is taxable in your hands;
* The first R2 000 of the cost of the asset (not money) given to you for
being brave at work or for having worked for 15 years non-stop or having
worked for 10 years in addition to the first 15 years is tax-free.
It seems if you worked for 25 years for one employer, the first R4 000 will
be exempt because you have the first 15 unbroken years service and the next
10 years of unbroken service.
It is clear that the Receiver of Revenue encourages taxpayers to stick to
working for one employer for no less than 15 years before securing this
benefit!