An employee has the right of use of a company vehicle and is supplied with a company petrol card. The employee does extensive travelling from store to store as part of his job description. The employer is implementing a fringe benefit tax of 3.5% or 3.25%
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
We agree with your view. It is only where the vehicle is held by the employer under an “operating lease” that the taxable value is equal to the actual cost incurred under the operating lease plus the cost of fuel incurred on the same vehicle. But then it is the actual amount of the fuel and not 3,5% thereof. Where the employer owns the vehicle, the taxable value is the 3,5%, or 3,25%, multiplied by the determined value for every month. That assumes that the employer pays all the expenses related to the vehicle. The taxable benefit is then reduced when the employee pays some of the expenses, licence, insurance, maintenance or fuel – see paragraph 7(8) of the Seventh Schedule.