Question relating to Fringe Benefit value on residential accommodation par 9 and par 2 (d). I have a client who provides accommodation to employees because they have to stay in a remote area. The houses are not valued that high. Houses are owned by compan
Important:
This answer is based on tax law year ending 28 February 2019.
Answer:
The cash equivalent of the value of the taxable benefit derived from the occupation of residential accommodation as contemplated in paragraph 2 (d) of the Seventh Schedule must be the rental value of such accommodation (as determined under subparagraph (3), (3C), (4) or (5) of this paragraph in respect of the year of assessment) less any rental consideration given by the employee for such accommodation in respect of such year. It appears, from the facts provided, that subparagraphs (3C) or (4) don’t apply – the formula must therefore be used.
The only relief then lies in paragraph 9(5) - it allows, where SARS is satisfied, by reason of the situation, nature or condition of the accommodation or any other factor, that the rental value of such accommodation is less than the rental value thereof determined in accordance with the formula (contemplated in subparagraph (3)), that SARS may determine such rental value at such lower amount as to him or her appears fair and reasonable.
It effectively replaces the formula value with a market related value. A request, that must be made by the employer, must be submitted on a form EMPRB. It is specifically stated, on this form, that “until the application form has been completed in full and submitted to SARS, along with all the required documents, the employer is deemed not to have applied for a directive.”
The employer can then only apply this lower amount as the value of the taxable benefit after application was made to SARS.