Tax­a­tion of mo­tor­ing ben­e­fits

Chronicle (Zimbabwe) - - Business - Labour Mat­ters

A MO­TOR­ING ben­e­fit, which an em­ployer may of­fer to an em­ployee for us­age of a motor ve­hi­cle as part of the em­ployee’s con­di­tions of em­ploy­ment, is li­able to Pay As You Earn (PAYE). The mo­tor­ing ben­e­fit granted in this case con­sti­tutes re­mu­ner­a­tion and should be sub­jected to PAYE in terms of the In­come Tax Act {Chap­ter 23:06]. Val­u­a­tion of mo­tor­ing ben­e­fit The value of mo­tor­ing ben­e­fit should be de­ter­mined based on “cost to the em­ployer”. The cost to the em­ployer in this case is based on a deemed cost which is pro­vided for in the Fi­nance Act.

e deemed cost ba­sis of valu­ing the mo­tor­ing ben­e­fit is also manda­tory in the sense that the pre­scribed amounts are not sub­ject to vari­a­tion in re­la­tion to the run­ning costs or the ve­hi­cle’s value. Cal­cu­la­tions of the ben­e­fit are based on en­gine ca­pac­ity of the ve­hi­cle and are not sub­ject to ap­por­tion­ment be­tween busi­ness and pri­vate us­age of the ve­hi­cle al­lo­cated to the em­ployee. The ben­e­fit is, how­ever, re­duced pro­por­tion­ally if the em­ployee uses the ve­hi­cle for only part of the tax year. Deemed val­ues The fol­low­ing are the deemed ben­e­fits for the pur­pose of cal­cu­lat­ing PAYE: In­clu­sion of the Ben­e­fit for VAT Pur­poses It should be noted that where the em­ployer is reg­is­tered for Value Added Tax (VAT), the motor ve­hi­cle ben­e­fit con­sti­tutes a tax­able sup­ply and should be in­cluded on the VAT 7 re­turn for the re­spec­tive pe­riod. Re­minder for Pay­ment of Tax Our val­ued clients are re­minded that the PAYE for the month of Oc­to­ber is due on or be­fore Novem­ber 10, 2016.

Dis­claimer This ar­ti­cle was com­piled by the Zim­babwe Rev­enue Au­thor­ity for in­for­ma­tion pur­poses only. ZIMRA shall not ac­cept re­spon­si­bil­ity for loss or dam­age aris­ing from use of ma­te­rial in this ar­ti­cle and no li­a­bil­ity will at­tach to the Zim­babwe Rev­enue Au­thor­ity.

Please tune in to Zi-FM Stereo ev­ery Wed­nes­day from 1930hrs-2030hrs for dis­cus­sions on Cus­toms and Tax mat­ters. THERE is a lot of con­fu­sion re­gard­ing the min­i­mum re­trench­ment pack­age and the law, with work­ers think­ing that there is room for ne­go­ti­a­tion for its bet­ter­ment and em­ploy­ers think­ing it is not ne­go­tiable.

Sec­tion 12 C(i) of the Labour Act merely makes it oblig­a­tory for an em­ployer who wishes to re­trench em­ploy­ees to give writ­ten no­tice of his in­ten­tion to re­trench to the Works Coun­cil and if there is no Works Coun­cil other bod­ies can be ap­proached as di­rected by the Act.

When the em­ployer gives no­tice to the Works Coun­cil, he must pro­vide a list of em­ploy­ees he in­tends to re­trench and rea­sons for the re­trench­ment and a copy has to be sent to the Re­trench­ment Board.

Sec­tion 12 C(2) sets out the min­i­mum re­trench­ment pack­age in the event par­ties fail to agree on a bet­ter pack­age.

My read­ing of the Act does not re­quire par­ties to agree on pack­age.

The min­i­mum re­trench­ment pack­age is one month salary for ev­ery two years worked.

The Re­trench­ment Board is merely no­ti­fied of the in­ten­tion to re­trench once the em­ployer com­plies with the min­i­mum re­trench­ment pack­age.

It would seem the worker has no re­course once the em­ployer has com­plied with its min­i­mum pack­age even if he feels it is not good enough get­ting a higher pack­age is at the em­ployer’s dis­cre­tion.

Only in cases where the em­ployer al­leges in­abil­ity to pay the min­i­mum re­trench­ment pack­age, does the Re­trench­ment Board in­quire into mat­ters re­lated to abil­ity to pay as guided by pro­vi­sions of sec­tion 12C(3) of the Labour Act.

There are work­ers who wrongly think that be­fore re­trench­ing, em­ploy­ers have to first im­ple­ment mea­sures to avoid re­trench­ment as set out in sec­tion 12D of the Labour Act.

That is wrong as the pro­vi­sions of sec­tion 12D(2) read “Sub­ject to this sec­tion, be­fore giv­ing no­tice of in­ten­tion to re­trench any em­ployee in terms of sec­tion 12C, an em­ployer MAY (my em­pha­sis) agree with em­ploy­ees con­cerned . . .”

This clearly shows that ap­pli­ca­tion of mea­sures to avoid re­trench­ment is not manda­tory but de­sir­able and can­not hold back re­trench­ment as long as the re­trench­ment is based on pro­vi­sions of sec­tion 12C of the Labour Act.

Be­cause mea­sures to avoid re­trench­ment are not com­pul­sory and have a cum­ber­some process, very few em­ploy­ers fol­low them as they fear being caught up in the com­plex le­gal process and at times the sit­u­a­tion faced by the busi­ness will not be amenable to use of mea­sures to avoid re­trench­ment.

This un­for­tu­nately leaves work­ers feel­ing un­fairly treated as their ca­pac­ity to ne­go­ti­ate pack­ages above the min­i­mum set in the Labour Act is de­pen­dent on the em­ployer so is the in­sti­tu­tion of mea­sures to avoid re­trench­ment.

In con­clu­sion, work­ers have lim­ited say in re­trench­ment, if the em­ployer chooses to pay the min­i­mum re­trench­ment pack­age.

In fact, the amended leg­is­la­tion on re­trench­ment is harsh on labour.

Davies Ndu­miso Sibanda can be con­tacted on: e-mail: strat­waysmail@ya­hoo.com Or cell No: 0772 375 235

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