Category: Seventh Schedule – Benefits or advantages derived by reason of employment or the holding of any office

“Defined contribution component” definition of paragraph 12D of Seventh Schedule

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‘defined contribution component’ means a benefit or part of a benefit receivable from a pension fund, provident fund or retirement annuity fund-

(a)     where the interest of each member in the fund in respect of that benefit has a value equal to the value of-

(i)      the contributions paid by the member and by the employer in terms of the rules of the fund that determine the rates of both their contributions at a fixed rate;

(ii)     less such expenses as the board of that fund determines should be deducted from the contributions paid;

(iii)    plus any amount credited to the member’s individual account upon-

(A)    the commencement of the member’s membership of the fund;

(B)    the conversion of the component of the fund to which the member belongs from a defined benefit component to a defined contribution component; or

(C)    the amalgamation of that fund with any other fund, if any, other than amounts taken into account in terms of subparagraph (iv);

(iv)    plus any other amounts lawfully permitted, credited to or debited from the member’s individual account, if any,

as increased or decreased by fund return; or

(b)     which consists of a risk benefit provided by the fund directly or indirectly for the benefit of a member of the fund if the risk benefit is provided by means of a policy of insurance or a risk benefit policy;

[Paragraph (b) substituted by section 43(1)(a) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

“Defined benefit component” definition of paragraph 12D of Seventh Schedule

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‘defined benefit component’ means a benefit or part of a benefit receivable from a pension fund, provident fund or retirement annuity fund by a member of that fund or a dependant or nominee of that member other than a defined contribution component or underpin component of a fund;

“Benefit” definition of paragraph 12D of Seventh Schedule

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‘benefit’ in relation to an employee that is a member of a pension fund, provident fund or retirement annuity fund, means any amount payable to that member or a dependant or nominee of that member by that fund in terms of the rules of the fund;

Seventh Schedule Index

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Seventh Schedule Index

Paragraph 1 – Definitions

Paragraph 2 – Taxable benefits

Paragraph 3 – Determination of cash equivalent of value of taxable benefit

Paragraph 4 – Taxable benefits granted by associated institutions

Paragraph 5 – Acquisition of an asset at less than actual value

Paragraph 6 – Right of use of any asset (other than residential accommodation or any motor vehicle)

Paragraph 7 – Right of use of motor vehicle

Paragraph 8 – Meals, refreshments and meal and refreshment vouchers

Paragraph 9 – Residential accommodation

Paragraph 10 – Free or cheap services

Paragraph 10A – Residential accommodation – other terms

Paragraph 11 – Benefits in respect of interest on debt

Paragraph 12 – Subsidies in respect of debt

Paragraph 12A – Contribution to benefit fund

Paragraph 12B – Incurral of costs relating to medical services

Paragraph 12C – Benefits in respect of insurance policies

Paragraph 12D – Valuation of contributions made by employers to certain retirement funds

Paragraph 12E – Contribution to bargaining council

Paragraph 13 – Payment of employee’s debt or release of employee from obligation to pay a debt

Paragraph13A – [Repealed]

Paragraph 14 – [Repealed]

Paragraph 15 – [Repealed]

Paragraph 16 – Benefits granted to relatives of employees and others

Paragraph 17 – Certificates by employers

Paragraph 18 – Annual statements by employers

Paragraph 19 – [Repealed]

Paragraph 20 – Amendments to this schedule

Paragraph 5 (Seventh Schedule) – Acquisition of an asset at less than actual value

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5.     ACQUISITION OF AN ASSET AT LESS THAN ACTUAL VALUE

(1)     Where an asset has been acquired by an employee as contemplated in paragraph 2(a), the cash equivalent of the value of the taxable benefit shall be so much of the value of such asset (as determined under subparagraph (2) of this paragraph) as exceeds the value of any consideration given by the employee for such asset.

(2)     The value to be placed on such asset shall be the market value thereof at the time the asset is acquired by the employee: Provided that where the asset in question is movable property (other than marketable securities or an asset which the employer had the use of prior to acquiring ownership thereof) and was acquired by the employer in order to dispose of it to the employee or the asset in question (other than marketable securities) was held by the employer as trading stock, the value to be placed thereon shall be the cost thereof to the employer or, where such asset was held as trading stock and the market value thereof was less than such cost, such market value: Provided further that where –

(a)     any asset is presented by an employer to an employee as an award for bravery, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so awarded to the employee during the year of assessment and R5 000; or

 

(b)     any asset is given by an employer to an employee for long service, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so given to the employee during the year of assessment and R5 000: Provided that the aggregate value of an amount reduced under this paragraph together with all amounts determined under paragraphs 6(4)(d) and 10(2)(e) of this Schedule and paragraph (vii) of the proviso to paragraph (c) of the definition of “gross income” in section 1 does not exceed R5 000.

[Paragraph (b) amended by section 35 of Act 30 of 2002 and substituted by section 40(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]

(3)     No value shall be placed under this paragraph on fuel or lubricants supplied by an employer to his employee for use in a motor vehicle where the value of the private use of such vehicle has been determined under paragraph 7.

(3A)  No value shall be placed under this paragraph on any immovable property used for residential purposes, and acquired by an employee as contemplated in paragraph 2(a): Provided that this subparagraph must not apply if-

(a)     the remuneration proxy of the employee exceeds R250 000 in relation to the year of assessment during which the immovable property is so acquired;

 

(b)     the market value of the immovable property on the date of that acquisition exceeds R450 000; or

[Item (b) amended by section 74 of Act 43 of 2014 effective on 1 March 2014]

 

(c)     the employee is a connected person in relation to the employer.

[Subparagraph (3A) added by section 119(1) of Act 31 of 2013 and amended by section 43 of Act 23 of 2020]

(4)     For the purposes of this paragraph, “long service” means an initial unbroken period of service of not less than 15 years or any subsequent unbroken period of service of not less than 10 years.

Paragraph 17 (Seventh Schedule) – Certificates by employers

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17.     CERTIFICATES BY EMPLOYERS

(1)     Every employer shall, within 30 days after the end of any year or period of assessment during which an employee of that employer has enjoyed any taxable benefit granted by the employer, or, in any particular case, within such further period as the Commissioner may approve, deliver to such employee a certificate which shall show the nature of such taxable benefit and the full cash equivalent of the value thereof during such year or period.

(2)     The provisions of subparagraph (1) shall also apply in respect of any taxable benefit referred to in paragraph 4 or 16.

(3)     Such employer shall within the said period of 30 days or the said further period, deliver to the Commissioner a copy of such certificate.

(4)      . . . . . .

[Subparagraph (4) amended by section 271 read with paragraph 104(a) of Schedule 1 of Act 28 of 2011 and repealed by section 10 of Act 21 of 2021]

(5)     ……….

(6)     The preceding provisions of this paragraph shall not apply where the cash equivalent of such taxable benefit constituted remuneration in the hands of the employee concerned from which employees tax was deducted or withheld by the employer and such cash equivalent has been included in an employees tax certificate delivered to the employee in terms of paragraph 13 of the Fourth Schedule, except to the extent that such cash equivalent was understated in such certificate.

Paragraph 18 (Seventh Schedule) – Annual statements by employers

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18.     ANNUAL STATEMENTS BY EMPLOYERS

 

(1)     Every employer shall on the return referred to in paragraph 14 of the Fourth Schedule declare that all taxable benefits enjoyed by employees of such employer during the period in respect of which such return was furnished, are declared on the employees’ tax certificates delivered to such employees or on any other return as may be required by the Commissioner.

 

(2)     Every such return shall, in the case of a company, be certified as correct by a director of such company.

 

19.       ……….