SD Management News

TAXATION OF ALLOWANCES AND FRINGE BENEFITS

Date: 02-08-2012Author: SD Management

SARS has recently published four Draft Interpretation Notes (DIN’s). These interpretation notes, whilst not law; provide taxpayers with useful insights with regard to the South African Revenue Services (SARS) current thinking and practical examples of the tax treatment of the following:

  1. Allowances, advances and reimbursements,
  2. The right of use of a motor vehicle,
  3. Long service awards,
  4. Use of employer provided cellular phones and computers.

Some of the specific items covered are:

  1. Clarification of the meaning of the phrase “obliged to spend at least one night away from his usual place of residence’ in the context of subsistence allowances,
  2. Examples are given as to what is regarded as business travel and what is private travel,
  3. How the employer needs to satisfy himself regarding whether to apply the 20% or 80% taxable inclusion to travel allowances,
  4. Guidance on the exemption for employee’s who are required to use their motor vehicle outside their normal hours of work,
  5. How to value the private use by an employee of company cellular phones, laptops and free/cheap services
  6. How to treat allowances/reimbursements granted to employee’s for the business use of their private assets,
  7. Do gift vouchers qualify as long service awards?

This list is not exhaustive and those wishing to read the complete DIN’s they can be downloaded from the SARS website by using the following link http://www.sars.gov.za/home.asp?pid=677 and by clicking on the relevant note.

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