“My employees privately use company cell phones and other computer equipment. Is this a taxable fringe benefit?”

Simangele Mzizi, Fsp Business, 08 Jan. 2015

Tags: fringe benefits, fringe benefits tax, taxable fringe benefits, tax-free fringe benefits, company cell phone and tax

Fringe benefits continue to be a thorny issue for many employers.

The high number of questions our tax experts get on the topic is proof.

The good news is our experts welcome your questions and are always ready to help so you can comply with tax law.

This week, they got a question from an employer who wants to know if his employees’ private use of cell phones or computer equipment is a taxable fringe benefit or not.

Read on to find out the answer…

Here’s the answer if you want to know if your employees’ private use of cell phones or computer equipment is a taxable fringe benefit

If your employees privately use company cell phones and other computer equipment, it’s a taxable fringe benefit.
According to the experts behind The Fringe Benefit Guide All South African Companies Must Have, if:
  • If you own the asset, you must calculate the fringe benefit at 15% of the lesser of the cost. Or market value of the asset from the date your employee receives the right to use it; and
  • If you let your employee use the phone or computer equipment for most of its useful life, the total cost of the asset to you is the fringe benefit. It will accrue on the date he starts using the asset.
Note: If your employee uses the assets for business more than 50% of the time, there’s no value on the use of these assets.
But it’s not all doom and gloom.
There are fringe benefits that don’t attract tax.
********* Product endorsement *********
12 Taxable fringe benefits - are you taking advantage of all of them?

There are hundreds of companies out there that don’t know which fringe benefits are taxable or they land up taxing the wrong percentage on them...

This kind of error could cost you thousands in penalties to SARS if it catches you out – and it will!

Find out how to make sure every time you offer a fringe benefit to your employees you’ll know if it’s taxable or not and how to tax it correctly.

You can give your employees these four fringe benefits tax-free

You don’t have to withhold employees’ tax if:
  1. The private use of the asset is incidental to its business use. For example, your employee uses the asset for personal reasons every now and then;
  1. You provide the asset to your employees as an amenity or for recreational purposes;
  1. The asset is books, literature, recordings or works of art; and
  1. The asset consists of telephone or computer equipment your employee uses mainly for your business.
Now that you know your employees’ private use of company cell phones and other computer equipment is a taxable fringe benefit, handle the fringe benefits tax correctly on your payroll. It’s the only way to avoid SARS penalties.
PS: To find out about the other 12 fringe benefits you must tax your employees on, check out The Fringe Benefit Guide All South African Companies Must Have.

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