“loan” ……….
[Definition of “loan” deleted by section 93 of Act 25 of 2015 effective on 8 January 2016]
Category: Seventh Schedule – Benefits or advantages derived by reason of employment or the holding of any office
Paragraph 11 (Seventh Schedule) – Benefits in respect of interest on debt
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]
“Month” definition of Seventh Schedule
“month” means any of the twelve portions into which any calendar year is divided;
Paragraph 12 (Seventh Schedule) – Subsidies in respect of debt
12. SUBSIDIES IN RESPECT OF DEBT
[Heading of paragraph 12 substituted by section 34 of Act 96 of 1985 and section 99 of Act 25 of 2015 effective on 8 January 2016]
The cash equivalent of the value of the taxable benefit consisting of any subsidy in respect of the amounts of interest or capital repayments referred to in paragraph 2(g) or any subsidy contemplated in paragraph 2(gA) shall be the amount of such subsidy.
“Official rate of interest” definition of Seventh Schedule
“official rate of interest” ……….
[Definition of “official rate of interest” amended by section 26 of Act 96 of 1985, GN R2706 of 1985, section 33 of Act 65 of 1986, GN 2683 of 1986, section 28 of Act 85 of 1987, GN R714 of 1989, section 24 of Act 70 of 1989, GN R763 of 1990, section 55 of Act 101 of 1990, section 35 of Act 141 of 1992, section 52 of Act 113 of 1993, GN 57 of 1994, section 30 of Act 21 of 1994, GNR1154 of 1995, section 40 of Act 36 of 1996, GN 1504 of 1998, GN 539 of 1999, GN R1022 of 1999 and GN183 of 2000, substituted by section 54 of Act 30 of 2000 and section 59 of Act 59 of 2000, amended by section 62 of Act 74 of 2002, substituted by section 90 of Act 7 of 2010, amended by section 93 of Act 25 of 2015 and deleted by section 67 of Act 17 of 2017 effective on 18 December 2017]
Paragraph 12A (Seventh Schedule) – Contribution to benefit fund
12A. CONTRIBUTION TO BENEFIT FUND
(1) The cash equivalent of the value of the taxable benefit contemplated in paragraph 2(i) is the amount of any contribution or payment made by the employer in respect of a year of assessment, directly or indirectly, to any medical scheme registered under the Medical Schemes Act or to any fund which is registered under any similar provision contained in the laws of any other country where the medical scheme is registered, for the benefit of any employee or dependants, as defined in that Act, of that employee.
(2) Where any contribution or payment made by an employer contemplated in subparagraph (1) is made in such a manner that an appropriate portion thereof cannot be attributed to the relevant employee or his or her dependants, the amount of that contribution or payment in relation to that employee and his or her dependants is deemed, for purposes of subparagraph (1), to be an amount equal to the total contribution or payment by the employer to the fund during the relevant period for the benefit of all employees and their dependants divided by the number of employees in respect of whom the contribution or payment is made.
(3) If the apportionment of the contribution or payment amongst all employees in accordance with subparagraph (2) does not reasonably represent a fair apportionment of that contribution or payment amongst the employees, the Commissioner may, on application by the taxpayer, decide that the apportionment be made in such other manner as is fair and reasonable.
[Subparagraph (3) substituted by section 59 of Act 31 of 2005 and section 100 of Act 25 of 2015 effective on 8 January 2016]
(4) ……….
(5) No value shall be placed in terms of this paragraph on the taxable benefit derived from an employer by –
(a) a person who by reason of superannuation, ill–health or other infirmity retired from the employ of such employer; or
(b) the dependants of a person after such person’s death, if such person was in the employ of such employer on the date of death; or
(c) the dependants of a person after such person’s death, if such person retired from the employ of such employer by reason of superannuation, ill–health or other infirmity.
“Taxable benefit” definition of Seventh Schedule
“taxable benefit” means a taxable benefit contemplated in paragraph 2, whether the grant of such benefit is voluntary or otherwise, but excluding –
(a) any benefit the amount or value of which is exempt from normal tax under the provisions of section 10 of this Act;
(b) any benefit provided by any benefit fund in respect of medical, dental and similar services, hospital services, nursing services and medicines;
(c) any lump sum benefit payable by a benefit fund, pension fund, pension preservation fund, provident fund, or provident preservation fund being a benefit referred to in the definition of ‘benefit fund’ in section 1 of this Act or in paragraph (i) of the proviso to paragraph (c) of the definition of ‘pension fund’ in that section or in paragraph (a) of the definition of ‘provident fund’ in that section;
(d) any benefit or privilege received by or accrued to a person contemplated in section 9(2)(g) or (h) stationed outside the Republic which is attributable to that person’s services rendered outside the Republic; or
(e) any severance benefit.
Paragraph 12B (Seventh Schedule) – Incurral of costs relating to medical services
12B. INCURRAL OF COSTS RELATING TO MEDICAL SERVICES
(1) The cash equivalent of the value of the taxable benefit contemplated in paragraph 2(j) is the amount incurred by the employer during any month, directly or indirectly, in respect of any medical, denial and similar services, hospital services, nursing services or medicines in respect of that employee, his or her spouse, child or other relative or dependants.
(2) Where the payment of any amount contemplated in subparagraph (1) is made in such a manner that an appropriate portion thereof cannot be attributed to the relevant employee and his or her spouse, children, relatives and dependants, the amount of that payment in relation to that employee and his or her spouse, children, relatives and dependants is for purposes of subparagraph (1), deemed to be an amount equal to the total amount incurred by the employer during the relevant period in respect of all medical, dental and similar services, hospital services, nursing services or medicines for the benefit of all employees and their spouses, children, relatives and dependants divided by the number of employees who are entitled to make use of those services.
(3) No value must be placed in terms of this paragraph on any taxable benefit –
(a) resulting from the provision of medical treatment listed in any category of the prescribed minimum benefits determined by the Minister of Health in terms of section 67(1)(g) of the Medical Schemes Act which is provided to the employee or his or her spouse or children in terms of a scheme or programme of that employer –
(i) which constitutes the carrying on of the business of a medical scheme if that scheme or programme has been approved by the Registrar of Medical Schemes as being exempt from complying with the requirements of medical schemes in terms of that Act; or
(ii) which does not constitute the carrying on of the business of a medical scheme, if that employee and his or her spouse and children –
(aa) are not beneficiaries of a medical scheme registered under the Medical Schemes Act; or
(bb) are beneficiaries of such a medical scheme, and the total cost of that treatment is recovered from that medical scheme;
(aA) where the services are rendered or the medicines are supplied for purposes of complying with any law of the Republic;
(b) derived from an employer by –
(i) a person who by reason of superannuation, ill-health or other infirmity retired from the employ of that employer;
(ii) the dependants of a person after that person’s death, if that person was in the employ of that employer on the date of death;
(iii) the dependants of a person after that person’s death, if that person retired from the employ of that employer by reason of superannuation, ill-health or other infirmity; or
(iv) a person who during the relevant year of assessment is entitled to a rebate under section 6(2)(b); or
(c) where the services are rendered by the employer to its employees in general at their place of work for the better performance of their duties.
Paragraph 2 (Seventh Schedule) – Taxable benefits
2. TAXABLE BENEFITS
For the purposes of this Schedule and of paragraph (i) of the definition of “gross income” in section 1 of this Act, a taxable benefit shall be deemed to have been granted by an employer to his employee in respect of the employee’s employment with the employer, if 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 –
(a) any asset consisting of any goods, commodity, financial instrument or property of any nature (other than money) has been acquired by the employee from the employer or any associated institution in relation to the employer or from any person by arrangement with the employer, either for no consideration or for a consideration given by the employee which is less than the value of such asset, as determined under paragraph 5(2): Provided that the provisions of this subparagraph shall not apply in respect of –
(i) any meal, refreshment, voucher, board, fuel, power or water with which the employee has been provided as contemplated in subparagraph (c) or (d);
(ii) any marketable security acquired by the exercise by the employee, as contemplated in section 8A, of any right to acquire any marketable security;
(iii) any qualifying equity share acquired by an employee as contemplated in section 8B; or
(iv) any equity instrument contemplated in section 8C; or
(b) the employee has been granted the right to use any asset (other than any residential accommodation or household goods supplied with such accommodation) for his or her private or domestic purposes either free of charge or for a consideration payable by the employee which is less than the value of such use, as determined under paragraph 6 in the case of an asset other than a motor vehicle or under paragraph 7 in the case of a motor vehicle; or
(c) the employee has been provided with any meal or refreshment or voucher entitling him to any meal or refreshment (other than any board or meals referred to in item (d)), either free of charge or for a consideration less than the value of such meal, refreshment or voucher, as the case may be, as determined under paragraph 8(2); or
(d) the employee has been provided with residential accommodation (whether furnished or unfurnished and with or without board, meals, fuel, power or water) either free of charge or for a rental consideration payable by the employee which is less than the rental value of such accommodation as determined under the applicable provisions of paragraph 9; or
(e) any service (other than a service to which the provisions of subparagraph (j) or (k) or paragraph 9(4)(a) apply) has at the expense of the employer been rendered to the employee (whether by the employer or by some other person), where that service has been utilized by the employee for his or her private or domestic purposes and no consideration has been given by the employee to the employer in respect of that service or, if any consideration has been given, the amount thereof is less than the amount of the lowest fare referred to in item (a) of subparagraph (1) of paragraph 10, or the cost referred to in item (b) of that subparagraph, as the case may be; or
(f) a debt (other than a debt for purposes of the payment by the employee of any consideration in respect of any qualifying equity share contemplated in section 8B to comply with the minimum requirements of the Companies Act or the payment of any securities transfer tax payable in respect of that share, or a debt in respect of which a subsidy is payable as contemplated in subparagraph (gA)) has been incurred by the employee, whether in favour of the employer or in favour of any other person by arrangement with the employer or any associated institution in relation to the employer, and either-
(i) no interest is payable by the employee in respect of such debt; or
(ii) interest is payable by the employee in respect thereof at a rate of lower than the official rate of interest; or
(g) the employer has paid any subsidy in respect of the amount of interest or capital repayments payable by the employee in terms of any debt; or
(gA) the employer has, in respect of any debt owed by the employee to any lender, paid to such lender any subsidy, being an amount which, together with any interest payable by the employee in respect of that debt, exceeds the amount of the interest which, if calculated at the official rate of interest, would have been payable in respect of that debt; or
(h) the employer has, whether directly or indirectly, paid any debt owing by the employee to any third person (other than an amount in respect of which item (i) or (j) applies), without requiring the employee to reimburse the employer for the amount paid or the employer has released the employee from an obligation to pay any debt owing by the employee to the employer: Provided that where any debt owing by the employee to the employer has been extinguished by prescription the employer shall be deemed to have released the employee from his or her obligation to pay the amount of such debt if the employer could have recovered the debt owing or caused the running of the prescription to be interrupted, unless the employer’s failure to recover the debt owing or to cause the running of the prescription to be interrupted was not due to any intention of the employer to confer a benefit on the employee; or
[Subparagraph (h) amended by section 55 of Act 31 of 2005 and substituted by section 100 of Act 22 of 2012 and section 94 of Act 25 of 2015 effective on 8 January 2016]
(i) the employer has during any period directly or indirectly, made any contribution or payment to any fund contemplated in paragraph (b) of the definition of ‘benefit fund’ in section 1 for the benefit of any employee or the dependants of any employee; or
(j) the employer has, directly or indirectly, incurred any amount (other than a contribution or payment contemplated in item (i)) in respect of any medical, dental and similar services, hospital services, nursing services or medicines provided to the employee or his or her spouse, child, relative or dependant.
(k) the employer has made any payment to any insurer under an insurance policy directly or indirectly for the benefit of the employee or his or her spouse, child, dependant or nominee : Provided that this paragraph shall not apply in respect of an insurance policy that relates to an event arising solely out of and in the course of employment of the employee;
[Subparagraph (k) added by section 102 of Act 24 of 2011, amended by section 100 of Act 22 of 2012, substituted by section 118(1)(b) of Act 31 of 2013 and amended by section 118(1)(c) of Act 31 of 2013 effective on 1 March 2016 – date of operation in section 118 of Act 31 of 2013 as substituted by section 130 of Act 43 of 2014 – and section 69 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]
(l) the employer has made any contribution for the benefit of any employee to any pension fund or provident fund: Provided that this subparagraph shall not apply to the transfer of any surplus as contemplated in section 15E(1)(b), (d) and (e) of the Pension Funds Act.
[Subparagraph (l) added by section 118 of Act 31 of 2013 effective on 1 March 2016 (Date of operation in section 118 of Act 31 of 2013 as substituted by section 130 of Act 43 of 2014) and substituted by section 69 of Act 23 of 2018 effective on 1 March 2017, applies in respect of years of assessment commencing on or after that date]
(m) the employer has made any contribution for the benefit of any employee to any bargaining council established under section 27 of the Labour Relations Act, 1995 (Act No. 66 of 1995), in respect of a scheme or fund as contemplated in section 28(1)(g) of that Act, other than any payment to a pension fund or provident fund as contemplated in subparagraph (l).
[Subparagraph (m) added by section 69 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]
2A. For the purposes of paragraph 2, a partner is deemed to be an employee of the partnership.
[Paragraph (2A) inserted by section 66 of Act 15 of 2016 effective on 19 January 2017]
Paragraph 12C (Seventh Schedule) – Benefits in respect of insurance policies
12C. BENEFITS IN RESPECT OF INSURANCE POLICIES
(1) The cash equivalent of the value of a taxable benefit deemed to have been granted as contemplated in paragraph 2(k) is the amount of any expenditure incurred by an employer during a year of assessment in respect of any premiums payable under a policy of insurance directly or indirectly for the benefit of an employee or his or her spouse, child, dependant or nominee.
(2) . . . . . .
[Sub-paragraph (2) deleted by section 124(1) of Act 31 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]
(3) Where an appropriate portion of any expenditure contemplated in subparagraph (1) cannot be attributed to the employee for whose benefit the premium is paid, the amount of that expenditure in relation to that employee is deemed, for the purposes of subparagraph (1), to be an amount equal to the total expenditure incurred by the employer during that year of assessment for the benefit of all employees divided by the number of employees in respect of whom the expenditure is incurred.