Did you know: You don’t have to withhold employees’ tax when it comes to these five benefits?

43984, 13 Nov. 2014

Tags: fringe benefits, tax-free fringe benefits

Not all fringe benefits are created equal.
There are certain benefits you need to tax (i.e. your payroll must withhold and deduct the correct amount of employees’ tax) when you give them to employees. And there are those you can give to your employees tax-free.
For the purposes of this article, we’ll focus on tax-free fringe benefits because they’re not well known.
When you grant the following five benefits, don’t withhold your employees’ tax
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;
#2: You provide the asset to your employees as an amenity or for recreational purposes;
For example, you allow your employees to use company computers to surf the Internet and pay their bills online, you allow employees to use your company’s gym and swimming pool or you provide a crèche free of charge for your employees’ children.
#3: The asset consists of any equipment or machine you let your employees use from time-to-time and for short periods.
Note: In this case, SARS must be satisfied the value of the private or domestic use of the asset is negligible. For example, your employee mainly uses the company laptop for business purposes, but from time-to-time, uses it to send and receive personal emails.
#4: The asset is books, literature, recordings or works of art; and
#5: The asset consists of telephone or computer equipment the employee uses mainly for your business.
There you have it: If you grant any of these fringe benefits, you don’t have to worry about withholding employee’s tax – they’re tax free.

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