1721. Personal use of business cell phones and computers
April 2009 – Issue 116
The National Treasury and SARS have cited enforcement inability and onerous compliance costs as the reason for removing the taxable fringe benefit which would normally arise on the private use of these business assets.
The Revenue Laws Amendment Act, 2008 places an added exclusion into paragraph 6(4) of the Seventh Schedule, which removes the taxable value that would otherwise have been placed on private use of telephones or computer equipment provided by an employer.
The exclusion is applicable with effect from the commencement of years of assessment ending on or after 1 January 2009 to all telephone and computer equipment, including:
· Modems on fixed lines of all kinds (e.g. dialup, ADSL, datalines) · Removable storage of all kinds · Printers and office related software (e.g. MS Office, operating systems, development tools, management tools).A further exclusion inserted into paragraph 10(2) of the Seventh Schedule removes the taxable value previously placed on the private use of communication services provided by an employer. This would include telephone line rentals and subscriptions for internet access.
The exclusion will apply in situations where the employer pays for the use of these assets or services. There is also no fringe benefit where the employee is reimbursed for the cost of the use of the asset or service on the employer receiving the necessary receipts. Where, however, the amount of reimbursements the employer makes to the employee is the full amount of the expense with no analysis of business and private use, SARS may attach a value to that benefit. Also, where a cash allowance is provided to an employee to pay for the use of the assets or service, this exclusion will not apply and the amount of the allowance will be fully taxable.
Ernst & Young
IT Act:7th Schedule par 6(4) and par 10(2)
This article to be read in conjunction with Item 1722 in order to qualify for 30 minutes of CPD.
