Results 1 to 6 of 6

Thread: Financial support for Domestic worker

  1. #1
    New Member
    Join Date
    Jan 2020
    Location
    South Africa
    Posts
    4
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Financial support for Domestic worker

    Our domestic worker's husband is divorcing her. We have been helping her with this process as she is at a disadvantage in the proceedings. During the process we found that the husband had been drawing on their Access bond - leaving her with a large mortgage to settle. She is fighting him in court over this to get the money back.

    She cannot fund this on her salary so we have been helping out through our company.

    My question is this something that can be claimed from a tax perspective and if so how?

    Appreciate any advice.

  2. #2
    Junior Member
    Join Date
    Jan 2020
    Location
    Cape Town
    Posts
    13
    Thanks
    4
    Thanked 2 Times in 2 Posts
    Hi Julian,

    This is capital of nature, the money that goes out will be against a loan account, this however can be written off, there is CGT applicable when writing off loans, since the amount is being paid from the business you can issue that to a loan and when you believe with certainty this amount is irrecoverable, write off the loan,

    The write-off will be added back for tax on the tax comp and added to CGT at 80%, from a tax perspective you can pay her for the business cleaning services and as an arrangement take this from the loan account and pay the loan off, this will enable you to increase expenses

    1. 20%
    2. Utilise future payments against loan

    Kind regards
    Francois

  3. #3
    New Member
    Join Date
    Jan 2020
    Location
    South Africa
    Posts
    4
    Thanks
    0
    Thanked 0 Times in 0 Posts
    Quote Originally Posted by Francois_za View Post
    Hi Julian,

    This is capital of nature, the money that goes out will be against a loan account, this however can be written off, there is CGT applicable when writing off loans, since the amount is being paid from the business you can issue that to a loan and when you believe with certainty this amount is irrecoverable, write off the loan,

    The write-off will be added back for tax on the tax comp and added to CGT at 80%, from a tax perspective you can pay her for the business cleaning services and as an arrangement take this from the loan account and pay the loan off, this will enable you to increase expenses

    1. 20%
    2. Utilise future payments against loan

    Kind regards
    Francois
    Thank you Francois for the detailed replay, I forgot to mention that she is employed by the business - does that alter the equation at all?

  4. #4
    Junior Member
    Join Date
    Jan 2020
    Location
    Cape Town
    Posts
    13
    Thanks
    4
    Thanked 2 Times in 2 Posts
    Hi Julian,

    It will just be a staff loan then, no difference, the amount is also probably immaterial to the financials thus no subordination is required. Loans can be complex depending on the circumstances, but in general small loans do not tend to create issues

    Kind regards
    Francois

  5. #5
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    326
    Thanks
    56
    Thanked 43 Times in 39 Posts
    Just a side note here: if the loan is more than R10000, and you donít charge interest, a fringe benefit must be shown on her payslip equal to the interest that should have been charged per SARSís tables.


    Sent from my iPhone using Tapatalk

  6. #6
    New Member
    Join Date
    Jan 2020
    Location
    South Africa
    Posts
    4
    Thanks
    0
    Thanked 0 Times in 0 Posts
    Quote Originally Posted by dellatjie View Post
    Just a side note here: if the loan is more than R10000, and you donít charge interest, a fringe benefit must be shown on her payslip equal to the interest that should have been charged per SARSís tables.
    Thank you again - appreciate your time and input.

Similar Threads

  1. [Question] Domestic worker termination of employment
    By sherenerowe in forum Labour Relations and Legislation Forum
    Replies: 3
    Last Post: 25-Jul-16, 08:08 AM
  2. garnishee order for my domestic worker
    By tgeldenhuys in forum General Regulatory Compliance Forum
    Replies: 35
    Last Post: 24-Jun-10, 05:33 PM
  3. Hiring a domestic worker
    By Renee H in forum Labour Relations and Legislation Forum
    Replies: 8
    Last Post: 23-Mar-10, 07:49 AM
  4. no more domestic worker
    By duncan drennan in forum General Business Forum
    Replies: 4
    Last Post: 09-Dec-06, 04:40 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •