Will company contributions to a disability benefit be taxed as fringe benefits?
09 April 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: Could you kindly assist with the following query as we seem to be
receiving conflicting information from various sources.
March 2015 the Disability Benefit/Income Continuity Benefit was tax deductible
and subject to Fringe Benefit tax. Changes to taxation for the 2016 Tax Year
have seen the tax deductible element fall away whilst the fringe benefit tax
is as follows:
company contribution to a Disability Benefit or Income Continuity Benefit be
subject to Fringe Benefit tax or is it only those funds that are unapproved?
A: Where insured benefits are provided by an approved fund (i.e. pension
or provident fund), then in our view the contributions to the fund from which
the benefits are provided do not fall within the ambit of the Seventh Schedule
to the ITA. They merely form part of the fund contributions by the employer
(i.e. it is not a separate obligation but part of the contribution per the fund
rules) and remain benefits payable by a fund from such contribution. The
changes in our view only affect unapproved fund benefits.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.