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Transportation for employees to go to and from the office: is it a fringe benefit?

Wednesday, 06 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: When an employer transfers his employees to and from work in a company vehicle, is this seen as a fringe benefit to the employees?

If it is, how is the value of this benefit calculated?

A: Para 2(e) of the Seventh Schedule to the Income Tax Act (No. 58 of 1962) (hereinafter referred to as ‘the Act’) may have the implication that such a service would constitute a taxable benefit and states the following:

‘For the purposes of this Schedule and of paragraph (i) of the definition of "gross income” in section 1 of this Act, a taxable benefit shall be deemed to have been granted by an employer to his employee in respect of the employee’s employment with the employer, if as a benefit or advantage of or by virtue of such employment or as a reward for services rendered or to be rendered by the employee to the employer—

(e) any service (other than a service to which the provisions of subparagraph ( j) or (k) or paragraph 9 (4) (a) apply) has at the expense of the employer been rendered to the employee (whether by the employer or by some other person), where that service has been utilized by the employee for his or her private or domestic purposes and no consideration has been given by the employee to the employer in respect of that service or, if any consideration has been given, the amount thereof is less than the amount of the lowest fare referred to in item (a) of subparagraph (1) of paragraph 10, or the cost referred to in item (b) of that subparagraph, as the case may be ...’ (own emphasis added).

However, in terms of par 10(2)(b), the value of the benefit may be zero if it consists of the following:

‘any transport service rendered by any employer to his employees in general for the conveyance of such employees from their homes to the place of their employment and vice versa’


From the facts provided, it would appear as if no value will be placed on the possible fringe benefit due to the application of par 10(2)(b) of the Seventh Schedule to the Act.

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.



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