Johannesburg — A NEW tax allowance is on the cards for employers who sell low-cost housing to their employees.
GA_googleFillSlot( "AllAfrica_Story_Inset" );
But the proposed allowance set out in the Revenue Laws Amendment Bill excludes taxpayers who wish to provide low-cost housing for their domestic workers.
Tax analysts say these employers will not benefit from the legislation as income tax laws disallow as deductions any expenses for the maintenance of taxpayers' families or establishments.
"For this reason, expenses related to the employment of domestics do not qualify for deduction," David Warneke, a tax partner at Cameron & Prentice Chartered Accountants, said last week.
It seemed the government might have missed a trick, he said. "The cost to the fiscus would be considerably less if private individuals were to be given a tax incentive to provide low-cost housing than if the state had to provide the low cost housing."
The idea is that the sale of low-cost housing to employees has to be on an interest-free loan account, for a price that is no higher than the cost of the housing to the employer.
The allowance granted to the employer is 10% a year of the loan balance at each tax year-end of the employer.
For instance, if the employer sells a low-cost house to an employee for R100000 and does not demand any repayment for 10 years, the employer would enjoy an allowance of R10000 each year for 10 years.
Even better thn FREE!