Income Tax Act, 1962 (Act No. 58 of 1962)SchedulesSeventh Schedule : Benefits or Advantages Derived by reason of Employment or the Holding of any Office5. Acquisition of an asset at less than actual value |
| (1) | Where an asset has been acquired by an employee as contemplated in paragraph 2(a), the cash equivalent of the value of the taxable benefit shall be so much of the value of such asset (as determined under subparagraph (2) of this paragraph) as exceeds the value of any consideration given by the employee for such asset. |
| (2) | The value to be placed on such asset shall be the market value thereof at the time the asset is acquired by the employee: Provided that where the asset in question is movable property (other than marketable securities or an asset which the employer had the use of prior to acquiring ownership thereof) and was acquired by the employer in order to dispose of it to the employee or the asset in question (other than marketable securities) was held by the employer as trading stock, the value to be placed thereon shall be the cost thereof to the employer or where such asset was held as trading stock and the market value thereof was less than such cost, such market value: Provided further that where— |
| (a) | any asset is presented by an employer to an employee as an award for bravery, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so awarded to the employee during the year of assessment and R5 000; or |
| (b) | any asset is given by an employer to an employee for long service, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so given to the employee during the year of assessment and R5 000: Provided that the aggregate value of an amount reduced under this paragraph together with all amounts determined under paragraphs 6(4)(d) and 10(2)(e) of this Schedule and paragraph (vii) of the proviso to paragraph (c) of the definition of ‘gross income’ in section 1 does not exceed R5 000. |
[Paragraph 5(2)(b) of the Seventh Schedule further proviso substituted by section 40(1) of the Taxation Laws Amendment Act, 2021 (Act No. 20 of 2021), Notice No. 770, GG45787, dated 19 January 2022 - comes into operation on 1 March 2022 and applies in respect of years of assessment commencing on or after that date (section 40(2))]
| (3) | No value shall be placed under this paragraph on fuel or lubricants supplied by an employer to his employee for use in a motor vehicle where the value of the private use of such vehicle has been determined under paragraph 7. |
[Paragraph 5(3) substituted by section 31(b) of Act No. 21 of 1994]
| (3A) | No value shall be placed under this paragraph on any immovable property used for residential purposes, and acquired by an employee as contemplated in paragraph 2(a): |
[Words preceding the proviso of the Seventh Schedule substituted by section 43 of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021]
Provided that this subparagraph must not apply if—
| (a) | the remuneration proxy of the employee exceeds R250 000 in relation to the year of assessment during which the immovable property is so acquired; |
| (b) | the market value of the immovable property on the date of that acquisition exceeds R450 000; or |
[Paragraph 5(3A)(b) of the Seventh Schedule substituted by section 74(1) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 March 2014]
| (c) | the employee is a connected person in relation to the employer. |
[Paragraph 5(3A) of the Seventh Schedule inserted by section 119(1) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) - 1 March 2014]
| (4) | For the purposes of this paragraph, "long service" means an initial unbroken period of service of not less than 15 years or any subsequent unbroken period of service of not less than 10 years. |
[Paragraph 5(4) substituted by section 31(c) of Act No. 21 of 1994]