Taxation of motoring benefits

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