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Fringe Benefits
Any 'benefit' provided or deemed to have been provided by an employer to an employee is referred to as a 'fringe benefit'. The value of all fringe benefits received by an employee are added to the employees' gross income and are taxable in terms of is Article 4(1)(b) of the Income Tax Act, which 'applies to all gains or profits derived from employment or office, regardless of whether they are received in cash or in kind'.
Although fringe benefits have the nature of normal income they have certain characteristics which warrant special regulation that seeks to:
- ensure that no doubts are raised as to the taxation of fringe benefits;
- establish in which circumstances and to what extent the benefits should be treated as fringe benefits;
- determine their value; and
- provide for the manner in which the Final Settlement System is to apply to fringe benefits.
Fringe benefits are taxable in the same way as normal salaries and wages. Persons in receipt of fringe benefits who fail to declare the fringe benefit will be liable to additional tax for omission as contemplated by the Income Tax Act.
The value of different fringe benefits is determined in accordance with the valuation guidelines set out by Inland Revenue Department. These valuations will determine the 'salary value' of the fringe benefits which will be taxed in the same way as ordinary income through the Final Settlement System [FSS].
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