Hi We have a taxpayer (Pastor/Public Office Holder) who stays free of charge in a home owned by a PBO (Trust). He receives no salary from them. If we have to apply the formulae as set out in Para 9 of the Seventh Schedule, the benefit would be Rzero, sinc
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
The principle at law is that the free use of the asset will only have tax implications for the beneficiary if it involves the vesting of income (or a capital gain) by the trustees. We accept that the trustees of the trust acted within their mandate to allow the individual to occupy the home. The fact that the trust is an approved public benefit organisation doesn’t change this principle.
You are correct that a taxable benefit my then arise when this was granted as a benefit or advantage of or by virtue of such employment or as a reward for services rendered or to be rendered by the employee to the employer.
Remember that, for the purposes of the Seventh Schedule, unless the context otherwise indicates –
“associated institution”, in relation to any single employer, means
(c) any fund established solely or mainly for providing benefits for employees or former employees of the employer or for employees or former employees of the employer and any company which is in terms of paragraph (a) or (b) an associated institution in relation to the employer, but excluding any fund established by a trade union or industrial, council and any fund established for post-graduate research otherwise than out of moneys provided by the employer or by any associated institution in relation to the employer.
The public benefit organisation may well not have been a fund established solely or mainly for providing benefits for employees (and consequently, not an associated institution).