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• Any benefit received by an employee by reason of the fact that his / her employer has borne certain expenditure incurred in consequence of the employee’s relocation from one place of employment to another or on the appointment of the employee or on termination of the employee’s employment, may be exempt from tax in terms on Section 10(1)(nB).
• A transfer that does not necessitate a change of residence does not fall within the ambit of the exemption.
• Expenditure exempt from tax: Where the employer has borne the expenses (costs) set out below (whether the employer pays the creditors directly or reimburses the employee for cost paid), they will be exempt from tax —
  • the transportation of the employee, members of his / her household and personal goods from his / her previous place of residence to his / her new place of residence;
  • any costs as the Commissioner may allow which have been incurred by the employee in respect of the sale of his / her previous residence and in settling in permanent residential accommodation at his / her new place of residence; and
  • the cost of renting temporary residential accommodation for the employee and members of his / her household during a period which ends 183 days after his / her transfer took place or after his / her date of appointment.
• Reimbursement of actual expenses: The following items are exempt from tax if the employer reimburses the employee for the actual expenditure incurred —
  • Bond registration and legal fees paid in respect of a new residence that has been purchased;
  • Transfer duty paid in respect of the new residence;
  • Cancellation fees paid of the cancellation of bond on the previous residence; and
  • Agent’s commission on sale of previous residence.
• Settling-in costs reimbursed to the employee by the employer are also exempt from tax. To simplify administration, an amount not exceeding one month’s basic salary may be paid to the employee free of tax to cover settling-in costs. This costs are for items such as —
  • New school uniforms;
  • Replacement of curtains;
  • Motor vehicle registration fees; and
  • Telephone, water and electricity connection.
• Expenditure fully taxable: Should payments be made by the employer in respect of the following two items, they will constitute taxable benefits in the hands of the employee concerned and be subject to the deduction of employees’ tax:
  • Payments to reimburse the employee for loss on the sale of a previous residence during transfer.
  • Architect’s fees for the design or alteration of a new residence.

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