New Fringe Benefit for Employees

By: Hospitality Partners Association  08-31-2011
Keywords: Financial Services, Hospitality, Legal Services

A number of Employers have, for several years, been contributing towards either an employee death or an employee disability policy on behalf of their employees (long-term insurance policies). The aforementioned policies were provided either by means of ‘approved’ plans or ‘unapproved’ plans, as defined by the South African Revenue Service (SARS).

These policies can be structured in the following ways:

  1. 1. The proceeds can be paid directly to the employees
  2. 2. The proceeds can be paid directly to the employer, with a side arrangement existing between
  3. 3. The employer and employee whereby the employer will pay proceeds over to the employee
    1. For many years, these contributions to policies on behalf of employees were allowed as a deduction for the employer, with no matching accounting for a fringe benefit in the hands of the employee.

      With effect 1 JANUARY 2011, these rules have however changed.

      • • If an employer enters into a group life or group disability plan for the direct or indirect benefit of the employees or their beneficiaries (the employees are the beneficiaries of the policies), the employer will only be allowed a deduction of said contributions if these premiums give rise to a simultaneous fringe benefit inclusion for the employees.

      • • If the employer is the beneficiary of the said policy and there is a side arrangement to repay the proceeds to the employee, the tax treatment will be similar to the aforementioned paragraph. The value of the said fringe benefit in both options will be equal to the premiums paid by the employer.

Keywords: Financial Services, Hospitality, Insurance Solutions, Legal Services

Contact Hospitality Partners Association

Email

Print this page

Share

Other news and updates from Hospitality Partners Association

Finanical Diligence Can Help Avoid Buyer's Remorse from Hospitality Partners Association thumbnail
10-07-2013

Finanical Diligence Can Help Avoid Buyer's Remorse

Financial due diligence considerations and timing in hospitality M&A can prevent buyer's remorse when buying a hospitality or leisure property.


06-12-2013

Grant Thorton SA explains consequences of company deregistration

Grant Thorton South Africa explains the deregistration process of a company or close corporation and what happens to immovable property in such an event. Requirements to re-instate a company have also been discussed.


06-11-2013

Pam Golding Hospitality Reviews Hotel Industry Trends in South Africa

Pam Golding Hospitality reviews hotel industry trends in South Africa based on the STR HotelBenchmark Survey. Read more.


12-14-2012

Should You Have A Trust

Much has been written and said about the advantages and disadvantages of having a Trust as a special vehicle through which to invest and grow assets. Opinions vary and at times the debate can get heated.


10-04-2012

What is Public Liability Insurance?

Is your business financially covered against all possible threats? Liability insurance provides cover for your business against the financial risk of being sued by a member of the public. Here’s everything you need to know to make sure you are fully covered.


Acquiring a Distressed Business May Be a Bargain but Beware Pitfalls from Hospitality Partners Association thumbnail
05-24-2012

Acquiring a Distressed Business May Be a Bargain but Beware Pitfalls

The ongoing global economic turmoil has resulted in a deluge of distressed companies available at bargain deals. While these deals provide the opportunity to generate value, they can be risky as buyers overlook important objectives in favour of the attractive low price of the target company.


03-02-2012

Is Cape Town over its World Cup ‘hangover’ and are 5-Star Hotels heading in a positive direction?

Is Cape Town over its World Cup ‘hangover’ and are 5-Star Hotels heading in a positive direction? The outlook for the 5-Star hotel market in South Africa is looking brighter, particularly when viewed against the backdrop of global uncertainty. Pam Golding Hospitality CEO Joop Demes shed a little light on the issue.


How to Buy a Guesthouse in South Africa from Hospitality Partners Association thumbnail
01-11-2012

How to Buy a Guesthouse in South Africa

Establishing an or similar hospitality business is an attractive proposition. This is particularly true in emerging markets where modest investments can yield significant returns.


10-19-2011

Immigration Experts Achieve Positive Outcomes

Professional immigration consultants will not only make the process of immigration easy and pain free, but there is a much higher chance of success.


08-31-2011

Leisure Tourism Stakeholders Meet to Solve Crisis

A Leisure Tourism Stakeholder Meeting was held on 28 June 2011, when around 70 senior tourism stakeholders met informally to discuss the current crisis in the leisure tourism industry and to come up with solutions.


08-31-2011

Direct Marketing and the CPA: The Do's and Don’ts

We all know that marketing is a crucial element of most successful businesses. But how, now that the new Consumer Protection Act (CPA) places substantial limitations on what is termed 'direct marketing'?


08-31-2011

FICA Increases Risk on Estate Agents

The three month compulsory registration period for Estate Agents to register with FICA has recently ended on 28 February 2011. Since that date the requirements of the Financial Intelligence Centre Act 38 of 2001 is applicable to all estate agents


08-24-2011

5 Star Hotels On The Increase In Cape Town

According to HPASA, 5-star hotels in Cape Town have increased their occupancies. Find out more about hospitality industry news and tourism in Cape Town.


08-16-2011

Bank Like A Banker

When you set out to buy new shoes, do you generally tend to browse around and compare the options at different stores before making a purchase?  Do you apply the same principles in terms of banking? Banking is part of your monthly expenses and only by comparing costs and shopping around for the best deals will you really be able to save.