Fringe Benefit - Use of company cellphone

[J7J]

Hi,

When we include a % that is deemed personal use of the cellphone account of an employee on his payslip as a fringe benefit (say 10%), do you include 10% of the VAT exclusive amount or 10% of the VAT inclusive amount? Can we claim 100% of the VAT on the invoice as an input, or can you only claim the 90% that is for business use?

Let's use some numbers to illustrate the question:

The employee's cellphone account is R500 per month ex VAT, R570 incl VAT.

1) Do I include R50 or R57 as a fringe benefit on his payslip
2) Can we claim R70 as input tax or only R63?
3) Does the 90% of the cellphone account that is not included on his payslip, ie. R450, then go to telephone expenses on the income statement?
4) How do you calculate the output VAT that is payable on this fringe benefit?

Thank you for your input!

[tax$$$]

Hi J7J

You don't have to include a fringe benefit if the cellphone is used mainly for business purposes.

All amounts exclude VAT. You can claim 100% input. The output on the fringe benefit makes up for the 10%.

Let's use some numbers to illustrate the question:

The employee's cellphone account is R500 per month ex VAT, R570 incl VAT.

1) Do I include R50 or R57 as a fringe benefit on his payslip
- include R50 (the Vat on the fringe benefit will be calculated as R50 x 14/114)
2) Can we claim R70 as input tax or only R63?
- can claim R70
3) Does the 90% of the cellphone account that is not included on his payslip, ie. R450, then go to telephone expenses on the income statement?
- I would think the total R500 still goes to expense account. Don't quote me on this .
4) How do you calculate the output VAT that is payable on this fringe benefit?
- as said in (1)

Thank you for your input!

Hope this helps.