Many individual taxpayers are employed and provide services to their employers. In exchange, the employer remunerates the employee which can take the form of a salary or wage. Many employers also provide benefits to employees. This is referred to as fringe benefits or taxable benefits. The Seventh Schedule governs how the value of a fringe benefit should be determined. The value to be determined is commonly referred to as the “cash equivalent” of the fringe benefit.
There are also various exceptions to the general principles and rules that we refer to as “nil value provisions”. In this series we will explore how the cash equivalent value related to each type of fringe benefit should be determined and calculated as well as the rules areound "nil value" provisions. In some instances a taxpayer can reduce the fringe benefit inclusion when determining taxable income for the year of assessment which consequently reduces the tax liability. These provisions will also be discussed in this series.