Did you know: These three relocation expenses are tax-free for your employee?

Simangele Mzizi, Fsp Business, 23 Sep. 2014

Tags: relocation expenses, fringe benefits, tax-free relocation expenses

The general rule when it comes to fringe benefits is, if you reward your employee, your payroll must withhold and deduct the correct amount of employees’ tax or face penalties.

But there are instances where this rule doesn’t apply.

You can reward your employee and don’t have to worry about accounting for tax – the benefit is tax-free. This is the case with some relocation expenses.

Keep reading to discover the three relocation expenses that are tax-free for your employee.

Three relocation expenses that are tax-free for your employee

According to Section 10(1) (nB) of the Income Tax Act, if you transfer your employee (e.g. so he can relocate to the Cape to work for your Cape Town branch), any benefits he or his relatives get through the transfer is tax free.

Here’s a breakdown of the three tax-free relocation expenses:

Relocation expense #1: The cost you incur for transporting your employee, members of his household and their personal goods from his previous home to his new one.

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Relocation expense #2: Costs your employee incurs when he sells his residence and settles into a new home. SARS will determine which of the costs will be tax free.

Relocation expense #3: The cost you incur for hiring temporary residential accommodation in a hotel or elsewhere for your employee or members of his household during the period ending 183 days after his transfer. Or after he took up his appointment, pending the obtaining of permanent residential accommodation.

Here’s the bottom line: You don’t have to worry about tax when it comes to these three relocation expenses – they’re tax-free for your employee.

PS: Be sure to check out the Practical Tax Loose Leaf Service. It’s your best source of information when if want to know more about fringe benefits.

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Muhammed Irshad Khan 2017-09-28 13:38:16

Is it a requirement that these tax free fringe benefits appear on a payslip and IRP 5 document?


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