The release from debt fringe benefit arises when an employer forgives a debt the employee owes it - for example writing off the balance of a staff loan. The amount released is a taxable benefit.
What it means
Cancelling a debt leaves the employee better off by the amount they no longer have to repay, which is value SARS taxes as remuneration. The benefit equals the amount of debt released. It often follows a staff loan, linking it to the low-interest loan benefit on the same loan.
Where it fits in
The benefit is a fringe-benefit component added to the PAYE base in the period the debt is released. It is reported on the IRP5 under the relevant source code, and it is a once-off event rather than a recurring monthly value.
Key rules
- Taxes the amount of a debt an employer forgives.
- Benefit equals the value of the debt released.
- Commonly follows the write-off of a staff loan.
- A once-off fringe-benefit component included in remuneration for PAYE.
