•Medical expenses – not subject to tax.•Telephone expenses – portion attributable to private use istaxable.•Loans – benefit on interest-free loans arises at LIBOR+5%.None arises for educational and technical training or medicaltreatment of the employee, spouse or child.
Subscribe to view the full document.
11INCOME TAXGross Income-S8(1)(f)How are the fo.llowing benefits taxed?•Use of paid for drivers.•Passage benefits (also apportionment of costs).•Use of employer owned furniture – practice is to tax employeeon 8% of the cost of the furniture.•E.g. A finance director is offered new employment and isoffered a fully furnished house. The cost to the employer ofthe furniture was $24,000. Calculate the annual benefit andmake a comparison of how much the employee would haveneeded to earn to afford similar furniture in a period of 12months (do not consider interest or finance charges).
12INCOME TAXGross Income-S8(1)(f)Employer provides furnitureCost of furniture to employer24,000Tax savings on capital allow. available to employer6,180Annual benefit ($24,000 x 8%)1,920Annual PAYE at the rate of 36.05%692Annual PAYE for 4 years2,769Employee purchasing furnitureGross amount to be earned to afford furniture37,529Tax deduction savings to employer9,664Tax payable on gross to achieve net amt required13,529Cost of furniture24,000