Year-end gifts are exciting – but SARS must get its cut.
As the end of the year approaches, many companies will be looking to reward their employees with gifts – also known as “fringe benefits”.Both options are incredibly generous – but it is important to remember that SARS must also get its cut.
In some instances, gifts are taxed based on the market value. The same goes for prizes that are given to top company performers. SARS usually treats this as a free or cheap service and will tax the employee on the cost of these tickets to the employer.There is an important caveat where an employer grants a long service award. The first R5 000 of a long service award is exempt from tax if all conditions are met.
As the bonus will increase your remuneration, it may result in a spike of tax in the month in which the bonus is paid.