Category: Employment


The Seventh Schedule to the Income Tax Act[1] lists various benefits that employers may grant to employees which will attract income tax for the employee,[2] and require the employer to also withhold PAYE on the amount of the benefit granted.[3] These provisions act as anti-avoidance measures to avoid employees receiving “masked” remuneration in formats other than cash in order to avoid a liability for income tax.

The Seventh Schedule identifies a number of such taxable fringe benefits, and further quantifies the cash flow equivalent of that benefit for purposes of inclusion ultimately in the employee’s taxable income. These taxable benefits provided by employers to employees include:[4]

  1. The acquisition by the employee of assets from the employer at less than its value;
  2. The right to use an asset for free or without the employee paying adequate consideration for the use thereof;
  3. Free meals, refreshments or vouchers to that effect;
  4. Free or cheap residential accommodation;
  5. Free or cheap services provided or sourced by the employer for the benefit of the employee;
  6. Where the employer provides an interest-free or low-interest loan to an employee;
  7. Where the employer pays all of, or a portion of, the employee’s debt owed to another person, with no recourse to the employee;
  8. The employer settles any direct or indirect medical costs incurred by the employee and to the benefit of the employee him/herself, as well as any other dependents;
  9. Contributions made by the employer to any insurance policy which will benefit the employee; and
  10. Contributions by the employer to any retirement type fund on behalf of the employee.

Fringe benefits further also extend to where the above benefits are granted to family members of the employee, or any other person where those benefits are extended by virtue of an arrangement between the employer and the employee and which is granted as a result of the existence of the employment relationship.[5]

Given the very wide definition afforded to the word “employee” for purposes of the fringe benefit regime,[6] we often find that clients are surprised at the very wide potential application of the above benefits, be it to the employee directly or not. Given that the PAYE regime, affected by the above mentioned, carries a potential penalty of imprisonment for up to twelve months in instances of wilful contravention or contravention without just cause,[7] it is of the utmost importance that employers too are completely up to date with and aware of the obligations that they may have towards SARS and arising from fringe benefits provided to employees.

[1] 58 of 1962.

[2] See paragraph (i) of the specific inclusions in the “gross income” definition in section 1 of the Income Tax Act.

[3] Paragraph 2 of the Fourth Schedule to the Income Tax Act.

[4] Paragraph 2 of the Seventh Schedule to the Income Tax Act.

[5] Paragraph 16 of the Seventh Schedule to the Income Tax Act.

[6] Paragraph 1 of the Fourth Schedule read with paragraph 1 of the Seventh Schedule to the Income Tax Act.

[7] Paragraph 30(1) of the Fourth Schedule to the Income Tax Act.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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The importance of the independent trustee

TRoos_A2A well-known court case, Land Bank of South Africa vs JL Parker and Two Others (the Parker case) irrevocably changed the requirements for independent trustees to be appointed and placed renewed focus on the duties and responsibilities of all trustees.

As a result of the Parker case, most Masters of the High Court now require an independent trustee to be appointed in addition to the trustees who are beneficiaries of the trust, and therefore will not issue a Letter of Appointment without at least one independent trustee being appointed. An independent trustee will be a person who is not related to the founder, the other trustees or the beneficiaries.

This independent trustee does not necessarily have to be a professional person but it must be someone who fully realises the responsibilities he or she is accepting when agreeing to act as a trustee, and is qualified in the view of the Master of the High Court to act as a trustee.

All trustees (independent or not) are charged with the responsibility to ensure that the trust functions properly to the greatest benefit of the beneficiaries. These responsibilities include, but are not limited to:

  1. Ensuring compliance with the provisions of the trust deed;
  2. Ensuring compliance with all statutory requirements;
  3. Conducting of proper trustee meetings;
  4. Recording of proper minutes of all meetings and decisions by the trustees;
  5. Proper maintenance and safekeeping of minute books.

It is clear that a person who is appointed as an independent trustee must have the necessary experience and expertise to properly execute these duties as well as to add value to the trust. In many cases, the trustees who are not independent do not have sufficient knowledge of and experience in the proper administration of trusts. Furthermore, they might also lack expertise in utilising the vehicle of the trust in order to maximise the benefit for the beneficiaries.

This expertise includes negotiating and entering into business contracts, holistic tax and succession planning, and ensuring the optimal growth of the trust assets. It is in the best interest of the trust that this person also has sufficient knowledge of the impact of statutory requirements, such as compliance with relevant tax law and the effect of changes in legislation on the trust.

All trustees assume significant responsibility when accepting an appointment as a trustee and careful consideration must be given before accepting such an appointment. Any breach of fiduciary duties by any trustee, including the independent trustee, will result in significant exposure for the trustees. Furthermore, any action taken by the trustees on behalf of the trust while the proper number of trustees is not appointed by the Master of the High Court will be null and void.

This newsletter is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

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Your guide to easy UIF claims

April_pic1Alice recently lost her job. She is feeling very despondent since she has no income to provide for her family and cover her monthly expenses.

She recalls that while she was employed she made monthly Unemployment Insurance Fund (UIF) contributions. However, Alice has no idea how to claim from the UIF and whether she qualifies as a claimant.


All workers who contributed to the UIF can claim if they have been fired, if their contract has come to an end, or if their employer is bankrupt. Domestic workers who have more than one employer can claim if they lose their job with one of their employers or if an employer dies.


  • Persons who resigned or quit their jobs
  • Persons who are suspended from claiming due to fraud
  • Persons who do not report at set dates and times
  • Persons who refuse training and advice that may be given by UIF staff
  • Persons who receive benefits from the Compensation Fund or from an Unemployment Fund established under the Labour Relations Act


You can start claiming from the last day of employment until your UIF benefits are used up or you started working again. Your current contract must have expired before registering for UIF. Furthermore, you must claim within six months after your last day of employment.


Unemployed workers must apply for UIF benefits in person at their nearest labour centre.

Step 1: Documentation

This step is of utmost importance if you want to claim your UIF successfully for the first time. It is important to have all the necessary documentation in order to avoid repeated trips to the labour centre. The required forms are available as PDF downloads at

You need:

  • Your 13-digit bar-coded ID or passport
  • UI-2.8 for banking details (Note that this needs to be signed by your bank and be accompanied by a stamped bank statement to confirm your bank account details.)
  • Form UI-19 to show employment history. This form is to be filled in by your previous employer. (Note that the Labour Department will check your last four years of work history to calculate your UIF benefit amount. Make sure you have all necessary declarations from previous employers dating back four years. If an employer has failed to issue you with a declaration, he must also fill out a UI-19 form.)
  • A workseeker form
  • Last two pay slips

Step 2: Go to the nearest labour centre

Once you have all the documents, go to the nearest labour centre. You can find the address and telephone number of your nearest centre at Note that the average waiting period at the labour centre can be anything from two to six hours, so make sure you have enough time. There is a slight chance that the staff at the labour centre may ask unemployed workers to go for training or advice – this is within their rights and you will have to take their advice.


Once you have registered for UIF benefits the staff at the labour centre will issue you with a UIF checklist. On this checklist you will find the address of the venue where you must sign for payment, as well as the date and time for your attendance.

Step 1: Go to the signing venue

You must appear at the designated venue on the date and time stipulated in order to sign for your first UIF payment. It is important to be on time. Take the UIF checklist and your ID document with you.

Step 2: Sign the unemployment register and receive UI-6A forms

If you have successfully registered for UIF, your name will be read out from a list. You will be required to sign a register to mark your attendance and confirm that you are still unemployed. Collect all the UI-6A forms (one for each future signing). Keep all these documents in a safe place as you will need them every time you are due for a UIF payment. This whole process can take up to three hours. Your first payment will be paid into your bank account within two to four days after you have signed the register.

Step 3: Note your next signing date

Make sure you are aware of your future signing dates – they are printed on your UI-6A forms. Signing dates will be approximately four weeks apart. You will have to hand in the relevant UI-6A form every time you attend, so make sure you have it with you. Note that your application may be delayed and not yet processed by the date of your first signing. It is recommended that you call the relevant labour centre the day before going to the signing venue to ensure that your application has been processed. If your application has not yet been processed you do not need to go to the signing. Ask for the date of the next signing.


The amount that you will be paid will depend on the amount of your monthly salary when you were employed.

Workers who earned less than R12 478 per month will receive approximately 36-56% of their average monthly salary for the previous four years; the higher the salary, the lower the percentage.

Workers who earned more than R12 478 per month will receive a fixed monthly benefit of approximately R4250-R4550.

How long you will be eligible to receive UIF payments depends on the length of time that you have contributed to the fund. You are eligible to receive one day's worth of benefits for every six days that you had worked and contributed to the UIF over the previous four years. The maximum number of days you can claim for is 238.

Note: You can calculate your UIF monthly payments by using the EZUIF calculator provided at:

This newsletter is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

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