Browsing by Author "Bokelman, Elizabeth Johanna"

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    Fringe benefits tax on HIV/AIDS disease management of employees in the world of work
    (Stellenbosch : Stellenbosch University, 2005-04) Bokelman, Elizabeth Johanna; Du Toit, J. B.; Van Schalkwyk, C. J.; Stellenbosch University. Faculty of Economic and Management Science. Dept. of Industrial Psychology. Africa Centre for HIV/AIDS Management.
    ENGLISH ABSTRACT: HIV-positive employees that receive treatment for HIV/AIDS by having their employers pay for the treatment are being taxed on their lifesaving HIV benefits paid by their employer. This comes after the Commissioner of Inland Revenue (CIR) or South African Revenue Service (SARS) identified the provision of treatment by employers as a “fringe benefit” in terms of paragraphs 2(e), 2(h) and 2(i) of the Seventh Schedule to the Income Tax Act1 and as such is taxable if the treatment is given from the work place. The treatment contribution is included in an employee’s remuneration package as a fringe benefit. Pay-as-you-earn (PAYE) and other assessed taxes are calculated from that. The taxable benefit is included on the employees’ annual IRP5 certificates. In order for the employer’s Human Resources department to affect this on the IRP 5 certificates the affected employee has to disclose his HIV/AIDS status and accordingly pay the PAYE on the fringe benefit. In terms of paragraph 2(e) of the Seventh Schedule to the Income Tax Act No. 58 of 1962, any service rendered at the expense of the employer to the employee, whether by the employer or by some other person, which has been utilised by the employee for private or domestic use, such value of the service must be included in the employee’s consideration for remuneration. Paragraph 2(h)2 taxes the employees on debts paid by the employer on behalf of the employees and paragraph 2(i)3 taxes a one third contribution benefit back in the hand of an employee for contributions to medical aids. If the employee were to receive chronic medication from a medical aid for HIV/AIDS treatment this will be included in the fringe benefit tax as a medical contribution.The Employment Equity Act No. 55 of 19984 promotes the elimination of unfair discrimination in the work place and ensures the implementation of Employment Equity to redress the effects of discrimination. Above all it also promotes the constitutional right to equality. In terms of confidentiality of the employees HIV/AIDS status; the Income Tax Act No. 58 of 1962 (Income Tax Act)5 as interpreted seems to be in conflict with the Employment Equity Act No. 55 of 1998. A solution therefore has to be sought where: - The anonymity of an employee in terms of his/her HIV/AIDS status is protected as envisaged by the Employment Equity Act6. - It is also necessary to understand whether there is in fact conflict between the Income Tax Act7 and the Employment Equity Act8. - It is also necessary to establish whether there are any misconceptions in the interpretation of the legislation and - Try to find the best possible solution to minimise the impact of Income Tax and yet protect the confidentiality of the employees concerned.