There are the three elements to a fringe benefit – make sure you know what they are so you can handle them correctly

43984, 24 Oct. 2014

Tags: sars, fringe benefits,

The most common reason employers get hit with harsh SARS penalties is because they handle fringe benefits incorrectly.
They just hand out perks and forget to withhold and deduct the correct amount of employees’ tax for these benefits. When SARS sees this error, it pounces with a 10% penalty.
The good news is, you don’t have to suffer the same fate.
Today, we reveal the three elements to a fringe benefit. Read on to find out what they are so you can handle fringe benefits correctly and avoid SARS penalties.
Before we get to the elements, let’s define a fringe benefit
A fringe benefit is an advantage or benefit your employees earn through their employment. It can also be a reward for services they rendered to you as their employer.
Now take a look at the three elements to a fringe benefit…
Revealed: Three elements to a fringe benefit
SARS defines a fringe benefit as having all three of the elements below:
1. There must be an employment relationship between the person giving the benefit and the person receiving it.
2. The benefit accrues to your employee because of his employment (i.e. it’s a perk of his job).
3. The benefit must be a reward for services your employees rendered (or services they will render).
If the fringe benefit has all these three elements, it’s taxable unless there’s a specific SARS rule that exempts it.
This means, when you give the perk to your employee, you must tax him correctly on the benefit. It’s also a good idea to explain the tax treatment of fringe benefits to your employees so they understand the taxes on their payslips.
Now that you know about the three elements to a fringe benefit, handle them correctly so you can avoid SARS penalties.

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