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Tax Talk

Tax Talk

Author: Natalie Wocke
Date: 2014-10-24
Employment and Fringe Benefits

Right of Use of Asset
The Seventh Schedule of the Income Tax Act deals with benefits or advantages derived by reason of employment or the holding of any office. Paragraph 6 deals with the situation where an employer grants an employee right of use of an asset, other than a motor vehicle or residential accommodation, which are dealt with specifically in other sections.

An employer may grant an employee the right of use of an asset for private/domestic purposes. Where the cash equivalent of the right of use exceeds any consideration paid by the employee for the use, a fringe benefit is created. An employer must levy fringe benefits tax on such excess. The cash equivalent of the fringe benefit must be calculated according to the rules set out in paragraph 6. An appropriate portion must be allocated to each pay period.


Generally, no fringe benefit value is ascribed to private/ domestic use of an asset where :
  • such use is merely incidental to business use, or
  • the asset is enjoyed by the employee, at work or a place of recreation, provided by the employer to employees in general, or
  • consists of machinery or equipment , used by employees generally, for short periods and the value of such use is negligible; or
  • if the asset consists of a telephone or computer equipment used by the employee mainly for the employer's business, or
  • where the asset consists of literature, books, recordings or works of art.

For an appointment to evaluate whether you are correctly accounting for fringe benefits granted to employees, contact your nearest branch of Roberts and Chaplin - offices in Ballito (032) 586 0387 and Umhlali (032) 947 1010, for your convenience.