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SARS Clarifies Rules On Employees Transport Benefit

by Lorys Charalambous, Tax-News.com, Cyprus

27 March 2017


South African Revenue Service (SARS) has issued a Binding General Ruling (BGR) clarifying the application of the no-value provision in relation to employer-provided transport.

Employers often provide employees with transport services from their homes to their place of employment either for no consideration or for a consideration that is lower than the actual cost of the service provided. Such transport service is a taxable benefit in the hands of the employee, but may attract no value where certain requirements have been met.

The BGR, issued on March 22, 2017, sets out when the no-value provision applies, for transport provided between an employee's work and home. The ruling states: "Transport services provided to employees to and from any collection or drop-off point en route to or from the employees' homes and place of employment is accepted to fall within the provisions of paragraph 10(2)(b)," which provides for the no-value exemption.

SARS noted that the word "homes" is very specific and denotes a specific dwelling in which the employee resides or inhabits. The question that arises, it said, is whether, from an interpretive perspective, the word "homes" should be restricted to the exact position of an employee's specific dwelling. An employee could, for example, live in a block of flats, on a farm, or in a rural area with little or no accessible roads, it noted. In which case the employee may be required to walk to the nearest accessible road to obtain the transport service which could, for example, be kilometers away from his or her dwelling.

SARS said: "Taking the above into consideration, an employer may arrange for employees living within a certain radius to be collected from or dropped off at a common area or central point between the employees' homes and place of employment. An employer may also provide transport services for only part of the trip between the employees' homes and place of employment."

TAGS: South Africa | tax | value added tax (VAT) | interest | law | employees | services | Africa

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