(2) The cash equivalent of the value of the taxable benefit derived from the occupation of residential accommodation as contemplated in paragraph 2(d) shall be the rental value of such accommodation (as determined under subparagraph (3), (3C), (4) or (5) of this paragraph in respect of the year of assessment) less any rental consideration given by the employee for such accommodation in respect of such year. Any rental consideration given by him in respect of household goods supplied with such accommodation and any charge made to the employee by the employer in respect of power or fuel provided with the accommodation.
[Sub-paragraph (2) substituted by section 31(a) of Act 96 of 1985, by section 55(1)(a) of Act 30 of 1998, by section 97(b) of Act 25 of 2015 and by section 68(a) of Act 15 of 2016]
(3) Subject to the provisions of subparagraph (3C) and (4), the rental value to be placed on such accommodation for any year of assessment shall be an amount determined in accordance with the formula.
[Words preceding the formula substituted by section 76 of Act 43 of 2014 and section 97 of Act 25 of 2015 effective on 8 January 2016]
(a) an amount determined in accordance with the formula-
(A – B) x C x D
100 12
in which formula –
(i) “A” represents the remuneration proxy as determined in relation to the year of assessment;
(ii) “B” represents an abatement equal to an amount of R95 750: Provided that in any case where-
(aa) the employer is a private company and the employee or his spouse controls the company or is one of the persons controlling the company, whether control is exercised directly as a shareholder in the company or as a shareholder in any other company; or
(bb) the employee, his spouse or minor child has a right of option or pre–emption granted by the employer or by any other person by arrangement with the employer or any associated institution in relation to the employer whereby the employee, his spouse or minor child may become the owner of the accommodation, whether directly or indirectly by virtue of a controlling interest in a company or otherwise,
the said abatement shall be reduced to zero;
[Item (ii) amended by section 7(1) of Act 13 of 2015, by section 10(1) of Act 13 of 2016, by section 13(1) of Act 14 of 2017, by section 6(1) of Act 21 of 2018, by section 3(1) of Act 32 of 2019, by section 8(1) of Act 22 of 2020, by section 4(1) of Act 19 of 2021, by section 4(1) of Act 19 of 2022 and by section 6(1) of Act 19 of 2023 effective on 1 March, 2023 and applicable in respect of years of assessment commencing on or after that date]
(iii) “C” represents a quantity of 17: Provided that where the accommodation consists of a house, flat or apartment consisting of at least four rooms –
(aa) “C” represents a quantity of 18 if –
(A) such accommodation is unfurnished and power or fuel is supplied by the employer; or
(B) such accommodation is furnished but power or fuel is not supplied; or
(bb) “C” represents a quantity of 19 if such accommodation is furnished and power or fuel is supplied by the employer; and
(iv) “D” represents the number of months in relation to a year of assessment during which the employee was entitled to occupation of such accommodation.
[Item (iv) amended by section 76 of Act 43 of 2014 effective on 1 March 2015]
(b) ……….
[Paragraph (b) deleted by section 76 of Act 43 of 2014 effective on 1 March 2015]
(3A) ……….
[Subparagraph (3A) inserted by section 55 of Act 30 of 1998 and deleted by section 97 of Act 25 of 2015 effective on 8 January 2016]
(3B) Where the employee has an interest in the accommodation in question, subparagraph (3) shall apply.
(3C) Where the employer or associated institution in relation to the employer supplies accommodation, obtained in terms of a transaction at arm’s length with a person that is not a connected person in relation to that employer or associated institution and the full ownership does not vest in the employer or associated institution, the value to be placed on such accommodation shall be the lower of-
(a) the amount determined in accordance with subparagraph (3); and
(b) the amount of the expenditure incurred in respect of that accommodation by that employer or associated institution.
[Subparagraph (3C) inserted by section 76 of Act 43 of 2014 effective on 1 March 2015]
(4) The rental value to be placed on accommodation occupied temporarily for the purposes of a holiday shall be –
(a) where such accommodation is hired by the employer from a person other than an associated institution in relation to the employer, so much of the rental payable and any amounts chargeable in respect of meals, refreshments or any services relating to such accommodation as have been borne by the employer and are connected with the period during which the accommodation was so occupied; or
(b) in any other case, an amount calculated at the prevailing rate per day at which such accommodation could normally be let to any person who is not an employee of the employer or of any associated institution in relation to the employer.
(5) Where, by reason of the situation, nature or condition of the accommodation or any other factor, the Commissioner is satisfied that the rental value of such accommodation is less than the rental value thereof determined in accordance with the formula contemplated in subparagraph (3) or the rental value determinable under subparagraph (4), he or she may determine such rental value at such lower amount as to him or her appears fair and reasonable.
[Sub-paragraph (5) substituted by section 55(1)(d) of Act 30 of 1998 and by section 68(b) of Act 15 of 2016]
(6) Where any employee has been provided by his employer with residential accommodation consisting of two or more residential units situated at different places which the employee is entitled to occupy from time to time while performing his duties the cash equivalent of the value of the benefit of such units which shall be included in the gross income of the employee shall be the value of the unit with the highest rental value determined under subparagraph (2) over the full period during which the employee was entitled to occupy more than one unit.
(7) No rental value shall be placed under this paragraph on any accommodation away from an employee’s usual place of residence in the Republic provided by his employer while such employee is absent from his usual place of residence in the Republic for the purposes of performing the duties of his or her employment: Provided that the preceding provisions of this subparagraph shall not apply in respect of any residential unit referred to in subparagraph (6).
(7A) Subject to subparagraph (7B) no rental value shall be placed under this paragraph on any accommodation provided by an employer to an employee away from such employee’s usual place of residence outside the Republic-
(a) for a period not exceeding 2 years from the date of arrival of that employee in the Republic, for the purposes of performing the duties of his or her employment; or
(b) if that accommodation is provided to that employee during the year of assessment and that employee is physically present in she Republic for a period of less than 90 days in that year.
(7B) The provisions of subparagraph (7A)(a) do not apply-
(i) if that employee was present in the Republic for a period exceeding 90 days during the year of assessment immediately preceding the date of arrival referred to in subparagraph (7A); or
(ii) to the extent that the cash equivalent of the value of the taxable benefit derived from the occupation of the residential accommodation exceeds an amount equal to R25 000 multiplied by the number of months during which subparagraph (7A) applies.
(8) For employees’ tax purposes an appropriate portion of the cash equivalent referred to in subparagraph (2) shall be apportioned to each period during the year of assessment in respect of which any cash remuneration is paid or becomes payable by the employer to the employee.
(9) Where the employee has been provided with residential accommodation by his employer or any associated institution in relation to the employer and such employee has an interest in the accommodation in question, as contemplated in subparagraph (10), and the accommodation has been let to the employer or to any associated institution in relation to the employer, the said rental shall for the purposes of this Act (excluding this subparagraph) be deemed not to have been received by or to have accrued to the employee or any connected person in relation to the employee.
(10) For the purposes of subparagraphs (3B) and (9), an employee shall be deemed to have an interest in accommodation if –
(a) such accommodation is owned by the employee or a connected person in relation to such employee;
(b) any increase in the value of the accommodation in any manner whatsoever, whether directly or indirectly, accrues for the benefit of the employee or a connected person in relation to such employee; or
(c) such employee or a connected person in relation to such employee, has a right to acquire the accommodation from his employer.