National Treasury this week agreed to propose more generous tax relief for lower-income earners whose employers assist them with education and housing.
The draft Taxation Laws Amendment Bill, which was published in July, proposes introducing relief from fringe benefits tax for lower-income earners whose employers provide them with rented housing and later transfer the property to them at below market value.
It also proposes to increase the bursary and scholarship amounts that qualify for relief from fringe benefits tax and to raise the salary threshold for qualifying employees.
The proposed fringe benefits exemption for housing sold to an employee at less than market value will apply to employees who earned R250 000 a year or less (including bonuses, overtime and other fringe benefits) in the year before they acquired the property. The draft Taxation Laws Amendment Bill initially proposed remuneration of R200 000, but National Treasury this week agreed to revise this amount after comments that the threshold was too low.
Treasury also agreed this week that the value of a property that can be transferred to an employee free of fringe benefits tax should be raised from R350 000 to R450 000.
The memorandum to the bill says employers that operate in remote areas or that require their employees to be away from their usual place of residence – such as those in the mining industry – typically provide their employees with housing that they can acquire later at below market value. The tax relief will support the provision of affordable accommodation to low-income employees.
The bill proposes that this measure be effective from March 1 next year.
Currently, if your employer provides members of your family (including grandchildren, nieces and nephews) with a bursary or scholarship for basic or higher education, the value of the bursary will be added to your income as a taxable fringe benefit, unless you earn R100 000 a year or less and the bursary is worth R10 000 or less.
The bill proposes that employers will be able to offer relatives of their employees who earn up to R200 000 a year a tax-free bursary or scholarship of R10 000 for basic education or R30 000 for higher education.
This week, National Treasury agreed to amend the bill so that employees who earn up to R250 000 a year will qualify. It dismissed calls to provide tax relief for larger bursaries that could cover accommodation, saying the amendment was aimed at tuition fees and not incidental expenses.