As the year draws to a close, many South African companies give their employees festive season gifts to thank them for their service. If you are receiving a gift from your employer – be it the use of a company flat for the holidays or a shopping voucher – you will probably need to share it with the South African Revenue Service (SARS).
Here are some of the tax implications to be aware of:
An asset as a gift
If your employer gives you something that could be seen as an asset, SARS will treat it as a taxable benefit. The taxable value is generally the market value of the asset but in certain cases it is the cost to the employer. If you receive a nice watch, your employer should tax you for its full value on the payroll. The taxable value of the watch will be the cost thereof to the employer.
If your employer gives you a gift voucher in lieu of cash, SARS will regard it as an asset. There are a few exceptions. For example, if the gift is a long-service or bravery award and the value is not more than R5,000, it will not be treated as a taxable benefit.