Interaction between Fringe Benefits Values and VAT

Michelle Heerden () and Herman Albertus Viviers ()
Additional contact information
Michelle Heerden: University of Johannesburg
Herman Albertus Viviers: North-West University

A chapter in Towards Digitally Transforming Accounting and Business Processes, 2024, pp 713-730 from Springer

Abstract: Abstract The main objective of this study was to seek certainty regarding the interaction between the value-added tax (VAT) implications of fringe benefits and their impact on the taxable values of such taxable fringe benefits for income tax purposes. Hence, the study investigated whether VAT should be included or excluded when the taxable value of fringe benefits for income tax purposes are determined. In 2019, a minor amendment was made to the opening words of section 23C(1) of the Income Tax Act (No. 58 of 1962), a section that links the VAT consequences of a fringe benefit to that of determining its taxable value for income tax purposes. However, the actual words applied in the Amendment Act do not align with the National Treasury’s intention as described in its Explanatory Memorandum. This misalignment is the problem that the study aimed to address, highlighting the two possible approaches of interpretation: literal versus purposive. The methodology adopted was nested in the paradigm of interpretivism, whereby a qualitative research approach was employed by means of doctrinal research, supplemented by a basic comparative analysis of two different approaches of interpretation. The outcome of the study highlight an anomaly in the income tax consequences triggered by the application of section 23C(1), causing an unintended change in policy that has a negative impact on the taxable value of taxable fringe benefits. The paper makes recommendations to be considered by the legislator to rectify the identified anomaly, which could aid in providing certainty regarding the interaction between fringe benefit values and VAT.

Keywords: Cash equivalent; Fringe benefit value; Income tax; Market value; Section 23C; Value-added tax (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-46177-4_38

Ordering information: This item can be ordered from
http://www.springer.com/9783031461774

DOI: 10.1007/978-3-031-46177-4_38

Access Statistics for this chapter

More chapters in Springer Proceedings in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().