Is COVID-19 infecting fringe benefits?

Who would have thought that the traditional, unyielding, uncompromising work culture instilled by the ‘baby-boomers’ would end? Unless they’re a designated essential service, employees must be allowed to work from home. Colloquially known as ‘working remotely’, this became the new normal for South Africans when the lockdown began on 27 March 2020.

With this change, employers must consider the potential tax consequences for their companies and employees. Business tools that aid remote working are easy to take for granted in an office environment. But when these tools are used in the private homes of employees, tax consequences may arise.

Here are considerations for your business:

• Have you have kitted-out your staff with mobile data cards, laptops, desktops and other computer hardware, or have you agreed to pay them an allowance to cover the costs associated with these tools? Or will you work on a reimbursement basis if employees use their own tools?
• Similarly, have you given employees company mobile phones, or have you bought ‘pre-paid vouchers’ to ensure your staff stay in contact with you and can call clients?
• Are you considering arranging transport for your workers to return to their family homes or to allow employees the use of company cars for this purpose?
• Are you helping staff pay off their debt, or granting them interest-free loans to financially assist over this difficult time?Would you pay staff an advanced salary?
• What about paying towards the cost of staff testing for COVID-19, or offering mental-wellness programs and other counselling platforms?
• If your business is part of the essential services, firstly thank you, but also do you know that the beneficial tax dispensation previously reserved for mineworkers performing hazardous tasks during any emergency could similarly apply to your staff?

All of the above points have tax consequence and each needs to be considered in light of the current tax legislation.

It is important that as an employer you focus on business, the economy. Let us at BDO guide and advise you with your taxes.