Last year’s changes to the tax laws were aimed at ensuring that when your employer pays the premiums on your behalf to an unapproved group scheme for life assurance, lump- sum disability benefits or funeral benefits or for an income protection policy, this would give rise to a taxable benefit.
However, the explanatory memorandum to the Taxation Laws Amendment Bill 2011 says the language used in the changes was not explicit enough, and some employers took the position that the premiums they paid to a group life scheme did not give rise to a taxable benefit for an employee.
Hein Daffue, Sanlam’s legal adviser, says the South African Revenue Service argues that despite the inadequacy of last year’s changes, which took effect this year, premiums paid by an employer are in any case a taxable benefit under the definition of “gross income” in the Income Tax Act. But he says some tax specialists do not agree that the employer-paid premium falls under this definition.
The changes to the Income Tax Act that will become effective on March 1 next year are aimed at making it clear that if your employer pays premiums for a pol-