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Tax 32 > Unit 1 - Individuals - Fringe Benefits > Flashcards

Unit 1 - Individuals - Fringe Benefits Flashcards

1
Q

Definition: Fringe Benefit

A

Pmt made to EE usually in form other that cash

  • ER will reduce EE cash salary by amount equivalent to cost of providing the fringe benefit
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2
Q

Par (c) of the GI def.

A

All amounts received for services rendered

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3
Q

What is included in a TP GI i.r.o Par(c)

A
  • Any amount
  • Incl. any voluntary rewards
  • Received/accrued i.r.o services rendered/to be rendered
  • or any amount received/accrued i.r.o any employment/holding of an office.
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4
Q

“Voluntary awards”

A

As long as it is pd for services rendered/to be rendered = incl. in GI.

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5
Q

Provisos for Par (c)

A

i) Par (c) does not apply to benefits in Par (i) - Fringe benefits

ii) The person who rendered services must include the amount in their GI even if they have not received it.

iv)Long services awards to the extent that it does not exceed R5000 in total.

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6
Q

Under what provisions do long service awards fall

A
  • Par (c)
  • Par 5(2)(b), Par 6(4)(d), & Par 10(2)(e) of 7th Schedule
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7
Q

What does Par (i) - Fringe Benefits of the GI def Incl.

A

“Value” of frindge benefits received by EE/director form their ER.

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8
Q

What is “Value”

A

Cash Equivalent of fringe benefits as determined under provisions of the 7th Schedule

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9
Q

7th Schedule

A
  • Lists Taxable benefits
  • How the value of taxable benefits is to be calculated (Par 5 - 13)
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10
Q

Are gains from Share Options included

A

Par (c) specifically incl s8A - gains made by EE/director on exercise of share options granted to him by his ER

BEFORE 26 OCT 2004

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11
Q

Why are they referred to as taxable benefits and not pmts

A

Not pd in cash

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12
Q

Difference between Par(c) & Par(i)

A

Par (c) - amount
Par (i) - Value

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13
Q

What is the amount which is subject to tax in EE hands i.e CASH EQUIVALENT

A

Value of benefit - Any amount pd by EE for benefit

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14
Q

Definition of EE

A

A person who is EE for the purpose of the 4th Schedule (EE tax).

Incl. - Directors of Private companies [(Pty) Ltd]

Excl. - Any person (other than director/controlling shareholder) who retired prior to 1 MARCH 1992 by reason of superannuation, ill-health/other infirmity
- :. will not be subject to tax on any fringe benefit received after retirement

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15
Q

7th Schedule Benefits Included
- Hint = 15

A
  1. Acquisition of an assets for no consideration/ less than actual value
  2. Right of use of any asset (not residential accommodation/any motor veh.)
  3. Right of use of a Motor veh.
  4. Meals, refreshments & meal and refreshment vouchers
  5. Residential accommodation
  6. Free or cheap services
  7. Low interest loans
  8. Housing & other subsidies
  9. Housing & other subsidy schemes
  10. Pmt of EE debts/release of an EE from an obligation to pay debt

11.Medical aid fund contribution

  1. Medical exp. pd by ER
  2. Insurance provided by ER

14.ER contributions to pension/provident fund

  1. ER contributions to Bargaining Council
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16
Q

7th Schedule benefits Excluded
- Hint = 5

A

1.Benefits that are exempt from tax under s10

2.Benefit provided by any benefit fund i.r.o medical, dental & similar services, hospital services, nursing services & medicines

3.Any lump sum benefit payable by a benefit fund, pension/pension preservation fund, provident/provident preservation fund.

4.Any benefit/privilege received by/accrued to government EE, stationed outside SA

5.Any severance benefits

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17
Q

Definition: Benefits given by associated institutions

A
  • Where the ER is a company.
    Any other company which is managed & controlled directly/indirectly by substantially the same persons who manage & control the ER.
  • Where the ER is not a company.
    Any company which is managed & controlled by the ER/by any partnership of which ER is a member
  • Certain funds est. solely/mainly for providing benefits for EE/former EE of the ER/its associated institutions
    Excl. = Funds est. by
  • Trade union
  • Industrial council
  • Certain funds est. for postgraduate research
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18
Q

Benefits given by associated institution

A

Deemed to be a taxable benefit granted by ER if benefit would have been a taxable benefit had it been given by the ER personally.

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19
Q

Fringe benefit:

Par 2(a) & 5: Acquisition of an asset @ less than actual Value

A

BENEFIT:
The taxable benefit arises whenever EE has acquired an asset from:
- ER
- Associated institution
- Any other person by arrangement with his ER

for no consideration/for consideration less than Par 5(2) value.

CASH EQUIVALENT:
MV/cost/Lower of cost/MV (mentioned below)
Less: amount pd by EE

Value =
- MV @ time asset is acquired by EE.
OR
- If movable property which was acquired to give to EE = Cost to ER
OR
- If trading stock of ER = Lower of Cost/MV

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20
Q

Bravery/Long-service awards

A

Reduces the cash equivalent of long services awards given by ER -EE

Limited to lessor of:
- R5000 / aggregate of cost of all awards less than R5000.

Def:
- Initial unbroken period of >15 years
- Subsequent unbroken period of >10 years

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21
Q

Requirements of no value for ER-provided Low-cost housing Par5 of 7th schedule

A

Given to EE/Sold @ discount to EE, provided that:

  • MV <= R450,000 on date EE acquires it

OR

  • Remuneration proxy of EE <= R250,000 i.r.o YoA during which EE acquires the immovable property.

OR

-EE is not a connected person to ER

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22
Q

Define the Remuneration proxy

A

Remuneration in previous YoA

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23
Q

Define Remuneration

A

Salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument, allowance, pension, Superannuation allowance, retiring allowance, cash/otherwise.

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24
Q

When is the remuneration proxy use & how is it calculated?

A

When:

EE worked only part of the previous YoA or not at all in the previous YoA

Calculation:

Remuneration in 1st month of empl. / Number of days that EE was empl. in such month x 365 days

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25
Q

Fringe Benefit:

Par 2(b) & 6: Right of use of an asset (other than residential accommodation/Motor vehicle

A

BENEFIT:

For Private/domestic purposes free or for consideration < value of use

CASH EQUIVALENT:
Value of private/domestic use - consideration pd by EE/amount spent on maintenance

Value=
- If leased by ER = Rental pd by ER - Amount pd by EE

  • If owned by ER = Lower of MV/ Cost to ER x 15% per annum apportioned for the portion of yr asset used by EE - Amount pd by EE
  • If EE is granted sole right of use for major portion of assets useful life/Extending beyond that = Cost to ER
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26
Q

No values for right of use of asset

A
  • Use of assets is incidental to use asset for purposes of ER business/provided as amenity enjoyed by EE @ workplace/recreational purposes - not apply to clothing.
  • Equipment/machinery used by EE for short periods occasionally, & value of private use is negligible
  • Telephone/Computer equipment EE uses mainly for business purposes
  • Books, literature, recording/ works of art
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27
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

THE VALUE?

A

Value of private use - consideration pd by EE for use of the vehicle

Consideration excl. license, insurance, maintenance, fuel costs incurred by EE.

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28
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

THE VALUE OF PRIVATE USE/ cash equivalent?

A
  1. ER-owned/leased vehicle WITHOUT maintenance plan
    = 3.5% X Determined value of motor veh. for each month EE is entitled to use veh, for private purposes
  2. ER-owned/leased vehicle WITH maintenance plan
    = 3.25% X Determined value of motor veh. for each month EE is entitled to use veh, for private purposes
  3. Vehicle is held by ER under OPERATING LEASE
    = Lease is to be concluded @ arm’s length with lessor who is not a connected person to ER
    = Cost to ER, incurred under OL + Cost of fuel.
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29
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

Define Operating lease (OL)

A

All points must apply:

  • of moveable property
  • Lessor’s business in leasing vehicles as part of ordinary business
  • Lessor cannot be Bank/Finacial services business/insurance business
  • Vehicle may be hired by general public directly from lessor for < 1 month
  • Cost of maintaining & repairing veh. must be borne by lessor
  • Risk of destruction/loss of veh must be assumed by lessor. Lessor my claim from lessee for such loss arising out of lessee’s failure of proper care of veh.
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30
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

What is the determined value?

A
  1. Price of acquisition incl VAT (excl. Finance charge/ Interest
  2. Acquired @ no cost
    = MV
  3. For motor vehicle dealers
    = Dealer billing price incl VAT
  4. For motor vehicle dealers if pre-owned veh. has no cost
    = MV incl VAT + Cost of repairs incl VAT, for purpose of giving use of veh. to EE
  5. 2nd Hand/Pre-owned veh.
    = Cost to ER incl VAT
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31
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

Use for part of a month?

A

EE must be entitled to use only part of the month

Amount of fringe benefit for full month X nr of days in month that EE is entitled to use/Total nr of days in month

Does not apply if veh. is for any reason temporarily not used by EE for private purposes

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32
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

CHANGE IN EE USING VEHICLE?

A

DETERMINED VALUE IS REDUCED
If EE is granted right of use of veh., & veh. was acquired by ER > 12 months before time EE is granted right of use

Reduced by 15% p.a (reducing balance method) for each completed 12-month period)

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33
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

> 1 MOTOR VEHICLE.

A

EE uses each veh. primarily (>50%) for business purposes

Value of private use
= Based on vehicle with HIGHEST determined value (private use value) X 3.5/3.25% p.m

  • Not applicable where Par 7(7) & Par 7(8) applies
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34
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

Par 7(7) - Business use % reduction?

A

EE to claim a reduction in
value of fringe benefit
- Accurate record of business travels must be kept

  • Commissioner will reduce the value as follows:

Cash equivalent (e.g. 3.5% x determined value) X (business km’s/total km’s)

Deduct this from the Total value of fringe benefit to arrive @ private use value.

  • JUDGES are allowed to claim distance travelled btw home & courts as business km’s, still required to keep accurate records
  • Travel btw home and workplace does not constitute business km’s in all other cases
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35
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

Par 7(8) - EE bears all/some of costs

A

EE to claim a reduction in
value of fringe benefit
- Accurate record of private travels must be kept
&
EE must bear full amount of 1/< of following costs:
- License
- Insurance
- Maintenance

Calculation
= Cost incurred by EE (license, insurance & maint.) x private km’s/total km’s

Fuel cost - private use
= Private km’s X rate per km iro fuel as per table

Deducted from value of private use

Does not apply to right of use of motor vehicle under OL

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36
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

No values

A

Value of private use = nil (0)

  1. Veh. available & used EE/ER in general
  2. Private use = infrequent/incidental to business use
  3. Not normally kept by EE residence
  4. Regular use of vehicle outside of normal business hours (not permitted use private purposes)
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37
Q

Fringe Benefit:

Par 2(b) & 7: Right of use of motor vehicle

Define maintenance plan

A
  • Contractual obligation undertaken by provider in ordinary course of trade with general public to underwrite costs of all main. of that motor veh., other that cost related to top-up fluids, tyres/abuse of motor vehicle of:
    • Period not > 3 years & distance travelled
      by veh > 60,000km’s from date provider undertakes contractual obligation

Provided that contractual obligation may terminate @ earlier of:
- End of period of 3 years
- Date of which distance of 60,000 km’s is travelled.

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38
Q

Fringe Benefits

Par 2(c) & 8 - Meals, Refreshments & Meals and refreshment vouchers

A

BENEFIT

EE receives any meal/refreshment or voucher entitling him to any meal/refreshment for no consideration/ consideration @ lower than value of benefit.

Other than as part of residential accommodation.

CASH EQUIVALENT

Cost to ER - Amount pd by EE.

39
Q

Fringe Benefits

Par 2(c) & 8 - Meals, Refreshments & Meals and refreshment vouchers

NO VALUES

A
  • M&R supplied in canteen, cafeteria/dining room operated by/on behalf of ER & patronized wholly/mainly by EE
  • M&R supplied during business hours/extended hrs/on special occasion.
  • Meals enjoyed by EE in course of providing entertainment on behalf of ER.
40
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

BENEFIT

A

EE has been provided with residential accommodation from ER @ low/no rental, which is:

  • Furnished/unfurnished
  • With/without meals
  • With/without water & power.
41
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

CASH EQUIVALENT

A

Rental value for the year - Amount pd by EE.

42
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

CASH EQUIVALENT - AMOUNT PD BY EE

A

Total of rental for the accommodation, rental for household goods supplied with accommodation, and any charge made to EE by ER in respect of power/fuel provided with accommodation.

43
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

CASH EQUIVALENT - RENTAL VALUE
THE FORMULA

A

THE FORMULA

(A - B) x C/100 x D/12

A = Remuneration proxy
- Incl amounts pd to
EE/director for
services rendered
pd by ER/AI.
- Incl fringe benefits
excl residential
accommodation
- Incl taxable portion of allowances
incl in EE remuneration (80% of
travel allowance received by EE.
- Remuneration from all ER’s must be
considered iro previous year.

B = 2024: R95,750
2023: R91,250
2022: R87,300
2021: R83,100

C = 17, or if accommodation consists of a
house, flat/apartment consisting of
at least 4 rooms ( not just
bedrooms) then,
18, unfurnished & power/fuel supp, by
ER
18, furnished & power/fuel, not supp by
ER
19, furnished & power/fuel supp by ER.

D = Nr of months in the current YoA
during which EE was entitled to occupy
the accommodation.

44
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

When would you use the formula?

A

When the EE has an interest in the residential accommodation.

45
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

CASH EQUIVALENT - RENTAL VALUE
MODIFIED FORMULA

A

B = Nil 0

46
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

When is B = 0 in the modified formula

A

If either of the following 2 situations are present:

  1. ER is a private company & EE/EE spouse controls the company, directly as a shareholder/as a shareholder in another company.

OR

  1. EE/EE spouse/minor child has a right of option/pre-emption granted by ER/by arrangement w/ ER/AI whereby EE/EE spouse/minor child may become the owner of accommodation directly/indirectly by virtue of a controlling interest in company/otherwise.
47
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

Par 9(3C) - Accommodation rented by ER.

A

The fringe benefit is the LOWER of:

  1. Formula
    OR
  2. Expenditure incurred iro accommodation by ER/AI.
48
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

Par 9(3C) - Accommodation rented by ER.

When will the value of the fringe benefit be the LOWER of:

  1. Formula
    OR
  2. Expenditure incurred iro accommodation by ER/AI.
A

Where:
- Full ownership of accommodation does not vest in ER/AI. &
- ER/AI has obtained use of accommodation to an arm’s length transaction, &
- Use is obtained from a person who is not a connected person to ER/AI.

49
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

When will the EE be deemed to have an interest in the accommodation?

A

In the following situations ito Par 9(10):
- accommodation is owned by
EE/connected person iro EE; OR

  • Any increase in the value of
    accommodation in any manner, accrues
    for the benefit of the EE/connected
    person iro EE, OR
  • EE/ connected person iro EE has a right
    to acquire the accommodation from their
    ER.
50
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

Par 9(4) - Holiday accommodation.

A

Taxed as follows:
- Hired by ER = EE is taxed on all costs
borne by ER.
- In any other case = EE is taxed on the
prevailing rate per person per day @
which accommodation could normally
be let to a person who is not EE.

51
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

What is the amount incl. in GI where the EE is provided with the right of use of more than 1 residential unit?

A

Value of the unit with the HIGHEST RENTAL VALUE as determined in applying the formula.

52
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

NO VALUE

A

9(7) - No value will be placed on accommodation occupied by EE while he is away from his usual place of residence in R. To carry out duties of employ.

9(7A) - Where an EE usual place of residence is OUTSIDE R - EE is not taxed on being given use of Res. Accom. in R in each of the following situations:
a) for period not > 2yrs from date of
arrival in R for purpose of performing
duties of their employ. OR
b) if EE is physically present in R for
period not > 90 days in YoA.

9(9) - Use of res. accom. is rented by EE & EE has an interest in accom., rent pd by ER is deemed not to have been received by/accrued to EE/connected person of EE.

53
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

When does the 2 Year exemption iro Par 9(7A)(a) not apply:

A
  • EE is present in R for a period > 90 days during YoA immediately preceding the date of arrival.
  • Cash equivalent of the value of the taxable benefit derived from occupation of res. accom. > R25,000 x #months during which subpar. (7A) applies.
54
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

DEEMED HOUSING LOANS

A

EE is deemed to have been granted a loan equivalent to agreed-upon purch. price.

55
Q

Fringe Benefits

Par 2(d) & 10A - Deemed housing loans.

CASH EQUIVALENT

A

Interest @ official rate per annum x stated purchase price
Less: Rental pd by EE (rental % x stated purchase price)
= Taxable benefit

56
Q

Fringe Benefits

Par 2(d) & 9 - Residential accommodation

When has EE been deemed to have received a loan from ER/AI, = price stated in the agreement? i.e. no longer regarded as residential accom.

A

Where any EE has been granted the right to:
- Occupy res. accom. owned by ER/AI
&
- ito an agreement with ER/AI the EE/spouse/minor child are entitled/obligated to acquire res. accom. @ future date, @ stated price
&
- EE is required to pay rent iro such res. accom., calc. wholly/partly as % of the stated price.

Any rental pd by EE will be deemed to be interest pd by them.

57
Q

Fringe Benefits

Par 2(e) & 10 - Free/cheap service

BENEFIT

A

EE received service for no consideration/consideration @ lower than lowest fare (travel service) or in all other cases lower than cost to ER of having service rendered.

58
Q

Fringe Benefits

Par 2(e) & 10 - Free/cheap service

CASH EQUIVALENT

A

ER is engaged in conveying passengers - grants EE/ relatives to travel to a destination outside R for private/domestic purposes
Taxable benefit = lowest full fare - amount pd by EE/relatives iro of such facility.

In case of any other service
Taxable benefit = cost to ER - any amount pd by EE for service.

59
Q

Fringe Benefits

Par 2(e) & 10 - Free/cheap service

NO VALUE

A
  • ER is engaged in the business of conveying passengers
    grants EE/ relatives to travel to a
    • destination in R/overalnd outside R for
      private/domestic purposes
    • destination outside R, if normal flight &
      no firm advance reservation was made.
  • Transport service by ER to convey EE btw home & work
  • Any communications service - mainly used for the purpose of ER business.

_ Any services rendered by ER - EE @ work to help EE perform their duties better (including recreational facilities/ services to be enjoyed by EE @ place of work)

  • Travel facilities granted to EE spouse/minor child where the EE is stationed more > 250 km away from usual place of residence for more > 183 days within R.
  • Service granted for long service to extent that service does not exceed<= R5000
60
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

BENEFIT

A

Loan has been granted to EE, where no/low interest is payable, by:
- ER
- Any other person by arrangement with
ER.
- AI

61
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

Define the Official rate?

A

Rate = SA repo rate + 100 basis points.

100 basis points = 1%

Foreign currency loan = Foreign equivalent of SA repo rate for the foreign currency + 100 basis points.

62
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

What is the official rate in SA currently (2024)?

A

9.25%

63
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

CASH EQUIVALENT

A

Interest payable @ official interest rate - Interest incurred by EE = Taxable fringe benefit

  • The interest is the fringe benefit not the loan itself.
  • The loan itself is Capital in nature.
64
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

No value

A
  • Loans to EE < R3 000 in total @ any time.
  • Loans to EE to further their studies.
  • Loan to EE of <= R450 000 if all of
    following applies:
    • Assumed for purposes of acquiring
      immovable property used for res.
      purposes by EE.
    • MV of immovable property acquired <
      R450 000 in relation to the YoA during
      which property is acquired.
    • Remuneration proxy of EE < R250 000
      in relation to the YoA during which loan
      is granted.
    • EE is not connected person to ER.
65
Q

Fringe Benefits

Par 2(f) & 11 - Low-interest/interest-free loans

Par 11(5) - Deductions

A

If EE had to pay interest on the loan & such interest would have been in production of income = taxable benefit incl. in EE taxable income will be deemed to be interest incurred by him in the production of income :. Deductible form his taxable income.

For purposes of s11(a).

66
Q

Fringe Benefits

Par 2(g)/2(gA) & 12 - Subsidies

BENEFIT ito Par 2(g)

A

ER pays an amount as subsidy iro amount of INTEREST/CAPITAL REPMT payable by EE ito any debt.

67
Q

Fringe Benefits

Par 2(g)/2(gA) & 12 - Subsidies

CASH EQUIVALENT ito Par 2(g) & 2(gA)

A

Taxable benefit = Amount of Subsidy pd by ER.

68
Q

Fringe Benefits

Par 2(g)/2(gA) & 12 - Subsidies

BENEFIT ito Par 2(gA) - When does a taxable benefit arise ito Par 2(gA)

A

ER of EE is directly liable to pay amount to lender iro debt owed by EE to lender.

This is the case where lender made a low-interest loan to EE, due to fact that ER subsidized loan by making pmts to lender.

TAXABLE BENEFIT ONLY ARISES WHEN A POSITIVE AMOUNT IS PRODUCES.

69
Q

Fringe Benefits

Par 2(g)/2(gA) & 12 - Subsidies.

CASH EQUIVALENT ito Par 2(gA)

A

= Amount pd by ER to Lender + Interest payable by EE to Lender - (Amount of loan x official interest rate)

If answer is positive, then the taxable benefit = full subsidy pd by ER.

70
Q

Fringe Benefits

Par 2(g)/2(gA) & 12 - Subsidies

Ito Par 2(gA) - What if the amount pd by ER to Lender + Interest payable by EE to Lender - (Amount of loan x official interest rate) = NEGATIVE AMOUNT

A

Then Par 2(g) & 2(gA) does not apply.

Par 2(f) applies - fringe benefit is iro low-interest/interest free loan from ER - EE

Taxable benefit = Interest payable @ official interest rate - Interest incurred by EE

71
Q

Fringe Benefits

Par 2(h) & 13 - Discharge/release of EE obligation to pay debt

BENEFIT

A
  • ER pays amount owing by EE to any 3rd
    person without requiring EE to reimburse
    ER
  • ER releases EE from obligation to pay amount owing by EE to ER.
72
Q

Fringe Benefits

Par 2(h) & 13 - Discharge/release of EE obligation to pay debt

CASH EQUIVALENT

A

Taxable benefit = Debt pd by ER.

OR

Taxable benefit = Debt owed by EE to ER which has been written off

73
Q

Fringe Benefits

Par 2(h) & 13 - Discharge/release of EE obligation to pay debt

No value

A
  • Pmt of EE prof subscription if membership must be condition of employ.
  • Pmt of insurance premiums
  • Pmt to Government EE pension fund
  • Settlement to former ER arising from non-compliance of bursary/study loan settled by present ER if EE undertakes to work for present ER for at least unexpired period not worked for former ER.
74
Q

Fringe Benefits

Par 2(i) & 12A - Medical aid contributions

BENEFIT

A

ER has directly/indirectly made any contribution to any med. aid scheme for the benefit of EE/dependent.

Incl. Foreign medical aid schemes.

Under s6A & 6B - EE is deemed to have made the pmt of the contributions/medical expenses.

  • If the ER makes a pmt to a medical
    scheme iro an EE who is => 65 yrs, the
    value of that pmt is taxed as a fringe
    benefit in EE’s hands, & EE has to claim
    to s6A rebate.
75
Q

Fringe Benefits

Par 2(i) & 12A - Medical aid contributions

CASH EQUIVALENT

A

Taxable benefit = Amount of ER contribution to medical aid fund.

76
Q

Fringe Benefits

Par 2(i) & 12A - Medical aid contributions

CASH EQUIVALENT - How will specific EE portion be determined where portion relating to specific EE cannot be determined?

A

Specific EE portion = Full contribution made by ER/#Employees.

This is applicable to any fringe benefit if specific EE taxable fringe benefit cannot be determined due to ER making full (1 full pmt/aggregate amount due to medical aid fund) contribution for all employees @ once.

77
Q

Fringe Benefits

Par 2(i) & 12A - Medical aid contributions

No value

A
  • To retired EE who retired due to
    superannuation, ill-health/other infirmity
  • To dependents of a deceased EE
  • To dependents of a deceased retired EE
    who retired due to superannuation, ill-
    health/other infirmity
78
Q

Fringe Benefits

Par 2(j) & 12B - Incurral of costs relating to medical services

BENEFIT

A

ER incurred an amount iro:
- Medical, dental/similar services
- Hospital, nursing services
- Medicines
for EE/Spouse/Dependent/Child/Relative.

Under s6A & 6B - EE is deemed to have made the pmt of the contributions/medical expenses.

-If ER incurs qualifying medical expenses
for an EE who is => 65yrs, the value of
those pmts are not taxed as a fringe
benefit in EE’s hands.

79
Q

Fringe Benefits

Par 2(j) & 12B - Incurral of costs relating to medical services

CASH EQUIVALENT

A

Taxable benefit = Amount incurred by ER on behalf of EE/Spouse/Dependent/Child/Relative.

80
Q

Fringe Benefits

Par 2(j) & 12B - Incurral of costs relating to medical services

NO VALUE

A
  • Medical scheme run by ER for his EE -
    treatment must be listed by Minister of
    health.
  • To retired EE who retired due to
    superannuation, ill-health/other infirmity
  • To dependents of a deceased EE
  • To dependents of a deceased retired EE
    who retired due to superannuation, ill-
    health/other infirmity
  • For benefit of person =>65yrs
  • Any benefit which consists of services rendered to EE in general @ workplace for better performance of their duties.
  • Any medical benefit where services are rendered/medicines supplied to comply with any law in R.
81
Q

Fringe Benefits

Par 2(k) & 12C - Insurance Contributions

BENEFIT

A

ER makes pmt to an insurer under an insurance policy directly/indirectly for benefit of EE/Spouse/Dependent/Child/Nominee.

82
Q

Fringe Benefits

Par 2(k) & 12C - Insurance Contributions

CASH EQUIVALENT

A

Taxable Benefit = Amount incurred by ER for premiums pd.

83
Q

Fringe Benefits

Par 2(k) & 12C - Insurance Contributions

NO VALUE

A

TO ANY PREMIUMS PD BY ER ON A POLICY THAT RELATES TO AN EVENT ARISING SOLELY OUT OF & IN COURSE OF EMPLOY. OF EE.

i.e. Policy that applies only if EE is injured/killed at workplace.

ER may deduct these premiums under s11(a) - expenditure and losses actually incurred in the production of income not of a capital nature.

84
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

BENEFIT

A

ER makes contributions for benefit of EE to any:
- Pension fund
- Provident fund
- Retirement annuity fund (RA Fund)

85
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

What are the 3 components that are defined in Par 2(l)

A
  1. Defined benefit component
  2. Defined contribution component
  3. Underpin component
86
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

WHAT IS THE DEFINED CONTRIBUTION COMPONENT BASED ON?

A

Contributions made by member & ER + fund returns, net of certain expenses.

In addition, it could consist of:
- Benefits payable on death/permanent disablement of member. Provided that fund insures for this contingency by means of a policy of insurance/risk benefit policy.

87
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

CASH EQUIVALENT - DEFINED CONTRIBUTION COMPONENT

A

Taxable benefit = Amount contributed by ER to the fund for benefit of EE.

88
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

WHAT IS THE DEFINED BENEFIT COMPONENT BASED ON?

A

Member’s salary @ retirement.

89
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

CASH EQUIVALENT - DEFINED BENEFIT COMPONENT

A

X = (A x B) - C

X = Fringe benefit

A = fund member category factor.

B = amount of “retirement funding income” of EE

C = Sum of amount contr. by EE to fund excl. voluntary contr, to fund by EE & buyback

90
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

NO VALUE

A
  • For benefit of member who has already retired from fund
  • Of dependents/nominee of a deceased member of fund.
91
Q

Fringe Benefits

Par 2(l) & 12D - Contributions to retirements funds by ER

s11F Deduction allowed by EE

A

Amount of Par 12D fringe benefit is deemed to be a contribution of the EE to retirement fund

:. Deductible from EE taxable income.

92
Q

Fringe Benefits

Par 2(m) & 12E - Contributions to Bargaining Council (BC)

BENEFIT

A

ER makes any contribution to a BC on behalf of EE - YoA on/after 1/3/2019

93
Q

Fringe Benefits

Par 2(m) & 12E - Contributions to Bargaining Council (BC)

CASH EQUIVALENT

A

Taxable Benefit = Amount that ER contr.

s10(1) (gJ) - Exempts form tax any amount pd to a member on BC by the BC unless amount is from a pension/provident fund.

94
Q

Fringe Benefits

Par 16 - Benefits granted to relatives of EE & others

BENEFIT

A

By virtue of EE employ./as reward for services rendered/to be rendered.

Benefit is deemed to have been granted to EE.

Tax 32 (16 decks)

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