This fringe benefit arises when an employer gives an employee an asset, or sells it to them for less than it is worth. The value the employee receives over what they paid is a taxable benefit.
What it means
Handing over an asset cheaply is a way of rewarding an employee, so SARS taxes the gap. The benefit is the market value of the asset less any amount the employee paid for it. It applies to most assets, with some specific exclusions, for example certain low-value or long-service awards within limits.
Where it fits in
The benefit is a fringe-benefit component added to the PAYE base in the period the asset is acquired. It is reported on the IRP5 under the relevant source code, and the employee's payment reduces the taxable amount.
Key rules
- Taxes receipt of an asset for free or below market value.
- Benefit equals market value less what the employee paid.
- Some long-service and low-value awards are excluded within limits.
- A fringe-benefit component included in remuneration for PAYE.
