4.2 Residential accommodation

Commentary

4.2.1 Nil value of accommodation

South Africa
South Africa | Commentary

4.2.1 Nil value of accommodation

South Africa | Commentary

4.2     Residential accommodation

In terms of paragraph 2(d), a fringe benefit will arise where residential accommodation is provided by an employer to an employee either for free or for a rental consideration which is less than the rental value determined under paragraph 9 of the Seventh Schedule. This is an important benefit to consider for expatriate employees, as foreign nationals in South Africa as well as South African expatriates working abroad are generally provided with some form of company housing or housing assistance.

It should be noted that, from a tax technical perspective, the housing benefit dealt with under this section only applies to company-provided residential accommodation. This means that where the employer provides some other form of housing assistance, this section will not determine the application and the tax treatment must be determined in accordance with other applicable rules.

Paragraph 9 of the Seventh Schedule determines the cash equivalent of the fringe benefit created by paragraph 2(d). There are different rules of valuation, depending on the circumstances. Generally, the cash equivalent of the fringe benefit is the value of the rental of such accommodation, which is calculated according to a formula provided in paragraphs 9(3) and 9(3C). This formula is represented as below, as taken from SARS' Guide, titled External Guide for Employers in Respect of Fringe Benefits (Revision 9):

The formula:(A – B)

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