I receive a telephone allowance Of R1000 a month. The fringe benefit is included in my gross income and is taxed. Should a telephone allowance be included in the taxable income even though the use of the telephone is incidental to my work? as far as I kno
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Any allowance, and that includes the telephone allowance, is included in the taxable income of the recipient of the allowance – see section 8(1)(a)(i) of the Income Tax Act – and will be subject to tax. The Act doesn’t allow for any reduction in the amount in respect of business use. No deduction, other than the section 11(e) allowance in respect of the cost of the phone, can be made with respect to the other costs (telephone calls, repaid, insurance, etc.) – see section 23(m).
It is in terms of paragraph 6(4)(bA) of the Seventh Schedule, where the asset consists of telephone or computer equipment which the employee uses mainly for the purposes of the employer's business, that the no value provision applies. The same principle however doesn’t apply to an allowance.