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Question
Posted by: Pauly | 2008/11/26

Employment contract

MY LETTER OF EMPLOYMENT STATED THAT I WOULD HAVE FREE ACCOMMODATION WHILST IN THE EMPLOY AS THEIR BUILDING SUPERVISOR.AFTER 11YEARS THEY MAINTAIN THAT I SHOULD PAY TAX ON THIS FRINGE BENEFIT. PORTION OF THE ACCOMMODATION SERVES AS AN OFFICE.WHY SHOULD I PAY TAX ON OFFICE SPACE.

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Our expert says:
Expert ImageLabour lawyer

RE:EMPLOYMENT CONTRACT

You don't need to pay tax on office space and they need to apportion some of the space to office and other to living circumstances. You do however have to pay tax on accommodation.

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Our users say:
Posted by: pauly | 2008/11/27

MY INITIAL CONTRACT INCLUDED FREE ACCOMMODATION AS IT MEANT THAT I WOULD BE PERMANENTLY AVAILABLE AND ON SITE WHICH IS A MAJOR PLUS FOR ANY EMPLOYER. I WAS NOT AWARE OF THE FRINGE BENEFIT CLAUSE AND THOUGHT THAT FREE ACCOMMODATION WAS COMPENSATION FOR ALL MY AFTER HOURS DISRUPTIONS AND CALLS WHICH ARE CONDUCTED FROM MY FLAT.

Reply to pauly
Posted by: TaxMan | 2008/11/26

Pauly,

Based on the info you supplied, it seems that you are receiving the following remuneration from your employer :
- Salary (Paid out to you)
- Free accommodation

SARS sees both of these as remuneration, in the sense that you don' t need to rent a place to stay, as the employer provides it.

Your taxable remuneration is thus your total remuneration (including your free accommodation).

Your employer, is, by law, obliged to deduct PAYE from you for fringe benefit. They may be heavily fined if they do not do so. Should a portion of your remuneration be made up of Commission, my advise to you, would be to visit a SARS branch, and apply for a Tax Directive, in order to claim back the portion of the residense used as an office, as well as other expenses paid by you on behalf of the work that you do (eg telephone calls, entertaining clients, fuel etc). If you have such a directive, it could be handed in to your employer, to force them to deduct tax on a lower bracket. I must emphasise though, that this might not work if you do not earn commission.

My advise to you would be to be happy that you don' t need to pay rent, or pay off a bond. The tax on the benefit is a small price to pay. Your employer could, in fact, pay you out your accommodation benefit in cash, also deduct tax from it, but then you would need to rent a place to stay (this can be VERY costly).

I hope this would help you. Should you have any further queries regarding the PAYE taxation process and it' s regulations, contact your local SARS office. I' m sure they would explain it to you in more detail!

Reply to TaxMan

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