11.     BENEFITS IN RESPECT OF INTEREST ON DEBT

[Heading of paragraph 11 substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]

(1)     The cash equivalent of the value of the taxable benefit derived in consequence of the debt owed by an employee in the circumstances contemplated in paragraph 2(f) shall be the amount of interest that would have been payable on the amount owing in respect of the debt in respect of the year of assessment if the employee had been obliged to pay interest on such amount during such year at the official rate of interest, less the amount of interest (if any) actually incurred by the employee in respect of the debt in respect of such year.

[Subparagraph (1) amended by section 33 of Act 96 of 1985 and substituted by section 48 of Act 21 of 1995 and section 98 of Act 25 of 2015 effective on 8 January 2016]

(2)     For the purposes of this Act –

(a)     a portion of the said cash equivalent shall be deemed to have accrued to the employee –

(i)      where interest in respect of the debt in question becomes payable by the employee at regular intervals, on each date during the year of assessment on which interest becomes so payable for a portion of such year;

[Item (i) substituted by section 98 of Act 25 of 2015 effecive on 8 January 2016]

(ii)     where interest in respect of the debt in question becomes payable by the employee at irregular intervals or where interest on the loan is not payable by him or her, on the last day of each period during the year of assessment in respect of which any cash remuneration becomes payable by the employer to the employee; and

[Item (ii) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016] 

(b)     the said portion shall be determined by calculating interest at the official rate of interest for the portion of the year referred to in subparagraph (2)(a)(i) or the period referred to in subparagraph (2)(a)(ii), as the case may be, and deducting therefrom so much of the amount of interest (if any) payable by him or her on the debt  as relates to the said portion of a year or the said period, as the case may be : Provided that where the official rate of interest has been altered with effect from any date, any cash equivalent which is under item (a) deemed to have accrued to the employee on any date falling before the date on which such interest rate was so altered shall be determined as though such rate of interest had not been so altered.

[Words preceding the proviso substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]

(3)     A different method of calculation of the said cash equivalent or portions thereof may be employed if the Commissioner decides, on application by the taxpayer, that such method achieves substantially the same result as the methods provided in subparagraphs (1) and (2).

[Subparagraph (3) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]

(4)     No value shall be placed under this paragraph on the taxable benefit derived in consequence of –

(a)     a debt owed by any employee to his or her employer if such debt or the aggregate of such debts does not exceed the sum of R3 000 at any relevant time; or

[Item (a) amended by section 2 of Act 8 of 2007 and section 1 of Act 3 of 2008 and substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]

(b)     the debt owed to any employer by an employee incurred for the purpose of enabling that employee to further his or her own studies;

[Item (b) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016 and amended by section 70 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]

(c)     a debt owed to his or her employer in consequence of a loan by that employer to that employee as does not exceed the amount of R450 000 if-

(i)      the debt was assumed for the purposes of acquiring immovable property used for residential purposes by the employee;

[Sub-item (i) substituted by section 44 of Act 23 of 2020]

(ii)     the market value of the immovable property acquired does not exceed R450 000 in relation to the year of assessment during which the property is acquired;

(iii)    the remuneration proxy of the employee does not exceed R250 000 in relation to the year of assessment during which the loan is granted; and

(iv)    the employee is not a connected person in relation to the employer.

[Paragraph (c) added by section 70 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]

(5)     Where any amount, being the cash equivalent as determined under the provisions of this paragraph, of the value of a taxable benefit derived by any taxpayer in consequence of a debt owed by him or her, has been included in such taxpayer’s taxable income in any year of assessment, such amount shall for the purposes of section 11(a) of this Act be deemed to be interest actually incurred by him or her in that year of assessment in respect of the said debt where such amount, had it been actually incurred as interest, would have been incurred by the taxpayer in the production of his or her income.

[Subparagraph (5) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]

10.     FREE OR CHEAP SERVICES

(1)     The cash equivalent of the value of any taxable benefit derived from the rendering of a service to any employee as contemplated in paragraph 2(e) shall be –

(a)     in the case of any travel facility granted by any employer who is engaged in the business of conveying passengers for reward by sea or by air to enable any employee or any relative of such employee to travel to any destination outside the Republic for his or her private or domestic purposes, an amount equal to the lowest fare payable by a passenger utilising such facility (had he or she paid the full fare), less the amount of any consideration given by the employee or his or her relative in respect of such facility: Provided that for the purposes hereof a forward journey and a return journey shall be regarded as one journey; or

(b)     in the case of the rendering of any other service as contemplated in the said paragraph, the cost to the employer in rendering such service or having such service rendered, less the amount of any consideration given by the employee in respect of such service.

(2)     No value shall be placed under this paragraph on –

(a)     any travel facility granted by any employer who is engaged in the business of conveying passengers for reward by land, sea or air to enable any employee in his employment or such employee’s spouse or minor child to travel –

(i)      to any destination in the Republic or to travel overland to any destination outside the Republic; or

(ii)     to any destination outside the Republic if such travel was undertaken on a flight or voyage made in the ordinary course of the employer’s business and such employee, spouse or minor child was not permitted to make a firm advance reservation of the seat or berth occupied by him or her;

(b)     any transport service rendered by any employer to his employees in general for the conveyance of such employees from their homes to the place of their employment and vice versa;

(bA)  any communication service provided to an employee if the service is used mainly for the purposes of the employer’s business;

(c)     any services rendered by an employer to his employees at their place of work for the better performance of their duties or as a benefit to be enjoyed by them at that place or for recreational purposes at that place or a place of recreation provided by the employer for the use of his employees in general;

[Item (c) amended by section 42(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

(d)     any travel facility granted by an employer to the spouse or any minor child of an employee if-

(i)      that employee is for the duration of the term of his or her employment stationed for purposes of the business of that employer at a specific place in the Republic further than 250 kilometers away from his or her usual place of residence in the Republic;

(ii)     that employee is required to spend more than 183 days during the relevant year of assessment at that specific place for purposes of the business of that employer; and

(iii)    that facility is granted in respect of travel between that employee’s usual place of residence in the Republic and that specific place where the employee is so stationed; or

[Item (d) deleted by section 36 of Act 30 of 2002, added by section 58 of Act 31 of 2005, substituted by section 69(1) of Act 35 of 2007 and amended by section 42(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

(e)     any services granted by an employer to an employee for long service as defined in paragraph 5(4) to the extent that it does not exceed R5 000: Provided that the aggregate value of an amount determined under this paragraph together with all amounts determined under paragraph (vii) of the proviso to paragraph (c) of the definition of “gross income” in section 1 and paragraphs 5(2)(b) and 6(4)(d) of the Seventh Schedule does not exceed R5 000.

[Item (e) added by section 42(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

9.     RESIDENTIAL ACCOMMODATION

8.     MEALS, REFRESHMENTS AND MEAL AND REFRESHMENT VOUCHERS

(1)     Where an employee has been provided with any meal, refreshment or voucher as contemplated in paragraph 2(c), the cash equivalent of the taxable benefit shall be so much of the value of such meal, refreshment or voucher (as determined under subparagraph (2) of this paragraph) as exceeds any consideration given by the employee in respect of such meal, refreshment or voucher.

(2)     The value to be placed on such meal, refreshment or voucher shall be the cost to the employer of such meal, refreshment or voucher.

(3)     No value shall be placed under this paragraph on –

(a)     any meal or refreshment supplied by an employer to his employee in any canteen, cafeteria or dining room operated by or on behalf of the employer and patronised wholly or mainly by his employees or on the business premises of the employer;

(b)     any meal or refreshment supplied by an employer to an employee during business hours or extended working hours or on a special occasion; or

(c)     any meal or refreshment enjoyed by an employee in the course of providing a meal or refreshment to any person whom the employee is required to entertain on behalf of the employer.

7.     RIGHT OF USE OF MOTOR VEHICLE

(1)     For the purposes of this paragraph, “determined value”, in relation to a motor vehicle, means –

(a)     where such motor vehicle (not being a vehicle in respect of which paragraph (b)(ii) of this definition applies) was acquired by the employer, the retail market value thereof as determined by the Minister by regulation (excluding any finance charge or interest payable by the employer in respect of the employer’s acquisition thereof); or

[Item (a) substituted by section 50 of Act 129 of 1991, section 91 of Act 7 of 2010 and section 75 of Act 43 of 2014 effective on 1 March 2015]

(b)     where such motor vehicle –

(i)      is held by the employer under a lease (other than an ‘operating lease’ as defined in section 23A(1)); or

(ii)     was held by the employer under a lease (other than an ‘operating lease’ as defined in section 23A(1)) and the ownership thereof was acquired by the employer on the termination of the lease,

the retail market value thereof at the time the employer first obtained the right of use of the vehicle or, where at such time such lease was a lease contemplated in paragraph (b) of the definition of ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act, the cash value thereof as contemplated in the definition of ‘cash value’ in the said section; or

(c)     in any other case, the retail market value, as determined by the Minister by regulation, of such motor vehicle at the time when the employer first obtained the vehicle or right of use thereof or manufactured the vehicle:

[Item (c) substituted by section 75 of Act 43 of 2014 effective on 1 March 2015]

Provided that –

(a)     where an employee has been granted the right of use of such motor vehicle as contemplated in subparagraph (2) (other than a motor vehicle acquired under an operating lease as defined in section 23A(1)) and such vehicle, or the right of use thereof, was acquired by the employer not less than 12 months before the date on which the employee was granted such right of use, there shall be deducted from the amount determined under the foregoing provisions of this subparagraph a depreciation allowance calculated according to the reducing balance method at the rate of 15 per cent for each completed period of 12 months from the date on which the employer first obtained such vehicle or the right of use thereof to the date on which the said employee was first granted the right of use thereof; and

(b)     where such motor vehicle was acquired by the employer from an associated institution in relation to the employer and the employee concerned had, prior to such acquisition, enjoyed the right of use of such motor vehicle, the determined value shall be the determined value as at the date on which the employee was granted the right of use of such motor vehicle for the first time.

(2)     Where an employee has been granted the right to use any motor vehicle as contemplated in paragraph 2(b), the cash equivalent of the value of the taxable benefit shall be so much of the value of the private use of such vehicle (as determined under this paragraph in respect of the period of use) as exceeds any consideration given by the employee to the employer for the use of such vehicle during such period, other than consideration in respect of the cost of the licence, insurance, maintenance or fuel in respect of such vehicle.

(3)

(a)    Where an employer’s rights and obligations under a lease in respecft of a motor vehicle are transferred to his employee the employer shall for the purposes of this Schedule be deemed to have granted the employee the right to use such vehicle for the remainder of the period of the lease.

(b)     In such case –

(i)      any rentals becoming payable by the employee under the lease shall be deemed to be a consideration payable by him for the said right; and

(ii)     the determined value of the vehicle shall be deemed to be an amount determined in accordance with the provisions of subparagraph (1) (b);

(4)     Subject to subparagraph (10), the value to be placed on the private use of such vehicle shall be determined for each month or part of a month during which the employee was entitled to use the vehicle for private purposes (including travelling between the employee’s place of residence and his or her place of employment or any other travelling done for his or her private or domestic purposes) and the said value shall-

[Words preceding item (a) substituted by section 91 of Act 7 of 2010 and section 67 of Act 15 of 2016 effective on 19 January 2017]

(a)     as respects each such month-

(i)      be an amount equal to 3,5 per cent of the determined value of such motor vehicle: Provided that where the motor vehicle is the subject of a maintenance plan at the time the employer acquired the motor vehicle or the right of use thereof, that amount shall be reduced to an amount equal to 3,25 per cent of the determined value of the motor vehicle; or

(ii)     where such vehicle is acquired by the employer under an ‘operating lease’ as defined in section 23A(1) concluded by parties transacting at arm’s length and that are not connected persons in relation to each other, be-

(aa)    the actual cost to the employer incurred under that operating lease; and

(bb)   the cost of fuel in respect of that vehicle; and

(b)     as respects any such part of a month, be an amount which bears to the appropriate amount determined in accordance with item (a)(i) or (ii) for a month the same ratio as the number of days in such part of a month bears to the number of days in the month in which such part falls.

(5)     No reduction in the value determined under subparagraph (4) shall be made for the purposes of item (b) of that subparagraph by reason of the fact that the vehicle in question was during any period for any reason temporarily not used by the employee for private purposes.

(6)     Where more than one motor vehicle is made available by an employer to a particular employee at the same time and  each such vehicle was used by the employee during the year of assessment primarily for business purposes, the value to be placed on the private use of all the said vehicles shall be deemed to be the value of the private use of the vehicle having the highest value of private use or such other vehicle as the Commissioner may decide, on application by the taxpayer: Provided that the preceding provisions of this subparagraph shall not apply where the provisions of subparagraph (7) or (8) are applied.

[Subparagraph (6) substituted by section 10 of Act 108 of 1986 and section 96 of Act 25 of 2015 effective on 8 January 2016]

(7)     Where accurate records of distances travelled for business purposes in such vehicle are kept, upon the assessment of the employee’s liability for normal tax for the year of assessment the value placed on the private use of the vehicle, calculated under subparagraph (4), must be reduced by an amount that bears to that calculated value the same ratio as the number of kilometres travelled for business purposes bears to the total amount of kilometres travelled in such vehicle during that year of assessment.

[Subparagraph (7) substituted by section 91 of Act 7 of 2010 and section 96 of Act 25 of 2015 effective on 8 January 2016]

(8)     Where accurate records of distances travelled for private purposes in such vehicle (other than a vehicle acquired as contemplated in subparagraph are kept and the employee bears-

(a)

(i)      the full cost of the licence for such vehicle, upon the assessment of the employee’s liability for normal tax for the year of assessment the value placed on the private use of such vehicle calculated under subparagraph (4) must be reduced by an amount that bears to the amount of the cost of the licence for such vehicle the same ratio as the number of kilometres travelled for private purposes bears to the total number of kilometres travelled in such vehicle during that year of assessment;

(ii)     the full cost of the insurance of such vehicle, upon the assessment of the employee’s liability for normal tax for the year of assessment the value placed on the private use of such vehicle calculated under subparagraph (4) must be reduced by an amount that bears to the amount of the cost of the insurance for such vehicle the same ratio as the number of kilometres travelled for private purposes bears to the total number of kilometres travelled in such vehicle during that year of assessment; or

(iii)    the full cost of the maintenance of such vehicle, upon the assessment of the employee’s liability for normal tax for the year of assessment the value placed on the private use of such vehicle calculated under subparagraph (4) must be reduced by an amount that bears to the amount of the cost of the maintenance for such vehicle the same ratio as the number of kilometres travelled for private purposes bears to the total number of kilometres travelled in such vehicle during that year of assessment;

(b)     the full cost of fuel for private use of such vehicle, upon the assessment of the employee’s liability for normal tax for the year of assessment the value placed on the private use of the vehicle during that year of assessment calculated under subparagraph (4) must be reduced by an amount determined for the total kilometres travelled for private purposes by applying the rate per kilometre for fuel fixed by the Minister in the Gazette for the purposes of section 8(1)(b)(ii) and (iii).

[Subparagraph (8) substituted by section 91 of Act 7 of 2010, amended by section 101 of Act 22 of 2012 and substituted by section 96 of Act 25 of 2015 effective on 8 January 2016]

(8A)    For the purposes of subparagraphs (7) and (8), if the employee contemplated in those subparagraphs is a “judge” or a “Constitutional Court judge” as defined in section 1 of the Judges’ Remuneration and Conditions of Employment Act, 2001 (Act No. 47 of 2001), the kilometres travelled between the judge’s place of residence and the court over which the judge presides must be deemed to be kilometres travelled for business purposes and not for private purposes.

(9)     ………..

(10)   For the purposes of this paragraph the private use by an employee of a motor vehicle shall be deemed to have no value, if –

(a)

(i)      the vehicle is available to and is in fact used by employees of the employer in general;

(ii)     the private use of the vehicle by the employee concerned is infrequent or is merely incidental to its business use; and

(iii)    the vehicle is not normally kept at or near the residence of the employee concerned when not in use outside of business hours; or

(b)     the nature of the employee’s duties are such that he or she is regularly required to use the vehicle for the performance of those duties outside his or her normal hours of work, and he or she is not permitted to use that vehicle for private purposes other than –

(i)      travelling between his or her place of residence and his or her place of work; or

(ii)     private use which is infrequent or is merely incidental to its business use.

(11)   For the purposes of this paragraph, ‘maintenance plan’, in relation to a motor vehicle, means a contractual obligation undertaken by a provider in the ordinary course of trade with the general public to underwrite the costs of all maintenance of that motor vehicle, other than the costs related to top-up fluids, tyres or abuse of the motor vehicle, for at least a period of not less than three years and a distance travelled by the motor vehicle of not less than 60 000 kilometres from the date that the provider undertakes the contractual obligation: Provided that the contractual obligation may terminate at the earlier of-

(a)     the end of the period of three years; or

(b)     the date on which the distance of 60 000 kilometres is traveled by that motor vehicle.