We are a construction company X. My question is about 2 different employees: Employee A moved to Johannesburg from Cape Town and the company is renting (paying) for accommodation in Johannesburg for the employee. Employee B moved to Johannesburg from
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The law relevant to the hiring residential accommodation in a hotel or elsewhere is found in section 10(1)(nB)(ii) of the Income Tax Act. The provision exempts from normal tax “… any benefit or advantage accruing to any employee (as defined in paragraph 1 of the Seventh Schedule) by reason of the fact that his employer (as defined in the said paragraph), has, in consequence of the transfer of the employee from one place of employment to another place of employment or appointment of the employee as an employee of the employer or the termination of the employee’s employment, borne the expense—
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…;
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…; or
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of hiring residential accommodation in an hotel or elsewhere for the employee or members of his household during the period ending 183 days after his transfer took effect or after he took up his appointment, as the case may be, if such residential accommodation was occupied temporarily pending the obtaining of permanent residential accommodation;
Paragraph 9(7A) of the Seventh Schedule is relevant to the foreign resident, we assume the individual is not a resident of the RSA. It reads as follows:
Subject to subparagraph (7B) no rental value shall be placed under this paragraph on any accommodation provided by an employer to an employee away from such employee's usual place of residence outside the Republic --
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for a period not exceeding 2 years from the date of arrival of that employee in the Republic, for the purposes of performing the duties of his or her employment; or
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if that accommodation is provided to that employee during the year of assessment and that employee is physically present in the Republic for a period of less than 90 days in that year.
The current practice generally prevailing explains the benefit of the use of a vehicle by more than one employee as follows:
The grant of a right to use a motor vehicle is the fringe benefit that is subject to taxation. An employer who allows more than one employee to use the same motor vehicle for private or domestic purposes is granting each of the employees a right to use the vehicle. Each employee must therefore be taxed on the full value of the benefit …