An employee earns a basic salary, travel allowance and gets a petrol card. The company pays for the petrol.. Is the petrol expense amount a fringe benefit in the hands of the employee?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The amount paid by card in respect of petrol is not a ‘fringe benefit’, but an allowance (code 3701).
The current practice prevailing in this regard is as follows:
“Employees who are provided with employer-owned petrol or garage cards are regarded as having borne the full cost of fuel if the full amount expended on that card during the year of assessment is included in their travel allowance and is taxed as remuneration in the manner set out in 5.1.”
5.1 refers to paragraph 5.1 in the Interpretation note.
BGR23:
Recipients who are provided with principal-owned petrol or garage cards are regarded as having “borne the full cost of the fuel” if the full amount expended on that card during the year of assessment is included in the recipient’s travel allowance and is taxed as remuneration.
In these circumstances, a recipient will be entitled to claim the “fuel cost” element as a deduction against the travel allowance.