Rendering of transport services by an employer

In December 2018, SARS published a draft binding general ruling regarding provision of transport services by an employer. This draft document is effective from March 2019.

Quoting SARS: “This BGR provides clarity on the no-value provision in respect of the rendering of transport services by an employer to employees in general, and must be read with BGR42 dated 22 March 2017 “No-value provision in respect of transport services”.

Employers may provide employees with transport services from their homes to the place of their employment. These transport services are a taxable benefit in the hands of the employee, but may attract no value where certain requirements have been met. There is uncertainty as to the application of the no-value provision as provided for in paragraph 10(2)(b) in terms of what is envisaged for transport services rendered by the employer, especially where the employer does not provide the transport service directly, but contracts another person to provide the transport service to employees.

It is accepted that transport services rendered by the employer to employees in general for the conveyance of such employees between their homes and the place of their employment, will fall within the provisions of paragraph 10(2)(b), if the following conditions have been met:

1. The transport service is rendered directly by the employer.
2. Where the transport service is not rendered directly by the employer (for example, where it is outsourced to a specific transport service provider), the employer makes it clear in the service conditions that –
(i) the transport service is provided exclusively to employees on the basis of predetermined routes or under defined conditions;
(ii) the employees cannot in any manner request such transport service from the service provider on an ad hoc basis; and
(iii) the contract for providing the transport service is between the employer and the transport service provider, and the employee is not a party to the contract.

The provision of and access to general public transport will not be regarded as a transport service rendered by the employer and will therefore not qualify for the no-value provisions of paragraph 10(2)(b).

SARS has issued this ruling under section 89 of the Tax Administration Act 28 of 2011.

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