Transport services to employees – it is not taxable

On 22 March 2017 SARS issued Binding General Ruling 42 (BGR42) which deals with the question of whether transport services provided by an employer to his employees constitute a taxable fringe benefit.

BGR42 follows Binding Private Ruling 262 (BPR262) where a similar question was placed before SARS for a private ruling.

In BPR158, SARS ruled that transport services paid for the by the employer to convey employees from a public transport interchange or a central collection point within a residential area to the employees’ place of work did not constitute a taxable fringe benefit.

Private rulings issued by SARS are only binding on SARS in relation to the applicant. Binding General Rulings, however, are binding on SARS in relation to all taxpayers and is in essence part of South African law.

In BGR42, SARS ruled that:

“Transport services provided to employees to and from any collection or drop-off point en route to or from the employees’ homes and place of employment is accepted [not to be a taxable fringe benefit]. [my insertion]

The BGR is welcomed and taxpayers are urged to take note of the ruling as it applies from date of issue until withdrawn or otherwise amended.

Access BGR42 here