FBT is a tax that employers pay on benefits paid to an employee (or their associate, such as a family member) in addition to their salary or wages. FBT is calculated on the taxable value of the benefits you provide. This is separate to income tax.
Is medical aid contributions paid by employer taxable?
In terms of paragraph 12B of the Seventh Schedule to the Income Tax Act, medical expenses (not contributions) paid by the employer on behalf of the employee is a taxable benefit. The value of the amount paid by the employer must be completed under codes 3813 (benefit) and 4024 (medical expenses).
What are SARS source codes?
A source code is a four digit identifier / number that SARS uses to capture information on the income tax return. It will usually appear alongside the amount it relates to.
Can employer deduct fringe benefits?
With limited exceptions, an employer can deduct the cost of a fringe benefit provided to an employee, regardless of whether the benefit is taxable to the employee.
How do I avoid fringe benefits tax?
You can reduce the amount of FBT you pay by:
- replacing fringe benefits with cash salary.
- providing benefits that your employees would be entitled to claim as an income tax deduction if they had paid for the benefits themselves (the ‘otherwise deductible’ rule)
- providing benefits that are exempt from FBT.
Who pays the fringe benefit tax?
employer
According to Section 33(A) of the NIRC, fringe benefit is a final tax on employee’s income to be withheld by the employer. It is the company that is liable for the fringe benefit tax and not the employee. As an employer, you are required to file fringe benefit tax remittances using BIR Form 1603 on a quarterly basis.
What is SARS code 4005?
4005: Employee contribution. 4116: Medical aid tax credits. Pension Fund. 4001: Employee contribution.
Is medical aid tax-deductible?
Originally, your medical aid contributions would be a deduction against your taxable income. Now, this medical credit is a tax credit which is deducted from your overall tax liability. The medical tax credit consists of the following two amounts: The medical scheme fees tax credit; and.
What is SARS code 4003?
Provident fund contributions
4003: Provident fund contributions (benefit + employee’s contribution) 4473: Employer’s contribution (not necessarily equal to the fringe benefit) Retirement Annuity Fund.
What is SARS code 4582?
However, a SARS programming issue results in an error in the totals in the IRP 5 code 4582. This code represents the total remuneration that is used for the purposes of the allowable deduction for pension, provident and retirement fund contributions.
What fringe benefits are deductible?
Common examples of this type of benefit are health insurance, qualified retirement plan contributions, and group-term life insurance up to $50,000. Even if the benefit is not taxable to the employee, you can still deduct the cost of providing the benefits, provided that you meet all the requirements.
Who is liable for fringe benefits tax?
According to Section 33(A) of the NIRC, fringe benefit is a final tax on employee’s income to be withheld by the employer. It is the company that is liable for the fringe benefit tax and not the employee. As an employer, you are required to file fringe benefit tax remittances using BIR Form 1603 on a quarterly basis.
