Last week, I wrote about the tax that is triggered by interest-free loans or loans advanced by employers to employees at low interest rates. I also stated that the employees are taxed primarily because they would have enjoyed an advantage, which arises due to the employer-employee relationship they have with their employers.
I also mentioned that the benefit is then added to the salary and tax is determined on the total remuneration earned. I want to discuss how different school fees arrangements also trigger tax in today’s article. As usual, words importing the masculine shall be deemed to include the feminine.
WHAT TAX IS THIS?
Before I expand on how exactly the school fees may trigger tax, it is important to first expand on what sort of tax we are talking about today. Whenever we talk of employer-employee relationships, the tax that arises in such scenarios is called Pay As You Earn (PAYE) or employees’ tax. This is a tax that an employer deducts from both monetary and non-monetary remuneration earned by employees.
Notice that monetary remuneration is real money paid to employees whilst non-monetary remuneration is what is alternatively called free benefits, fringe benefits, benefits-in-kind or advantages. In such instances, the employees do not receive money but enjoy an advantage due to an arrangement put in place by an employer.
HOW TAX & SCHOOL FEES MIX
The following are the different school fees arrangements that are common and how they trigger tax:
Fees paid to school: The most common arrangement regarding school fees is one where employers cater for employees’ school fee bills, which they pay directly to the school. What this means is that the employees are relieved of paying fees for their children, which certainly results in a taxable benefit. The benefit that is taxed in the employees’ hands is the equivalence of the amount paid by the employer to the school. For example, if an employee earns a salary of P 40 000 and his employer pays fees of P25 000 for the whole year in a particular month, that employee is taxed on P 65 000 in that month;
Transportation: Some employers also cater for the flights or transportation costs of their employees’ children. Such passage benefit is taxed as the employees would have enjoyed an advantage. However, there is a section in the Income Tax Act which exempts a passage benefit from tax in case it is contractual. In other words, as long as the passage benefit is included in employees’ contracts, no tax arises. If this tickles you, you may need professional advice to get it right;
School fee discounts: Some employers, especially educational institutions such as universities, colleges and schools allow their employees and their employees’ children to access educational services at such institutions either for free or at subsidized rates. Such arrangements certainly trigger tax in the sense that the employees enjoy a benefit that they would otherwise not have if they were not employed by their employers. The tax is determined on the difference between what any other students pays and what the employees’ children pay. For example, if school fees per term is P 12 000 and an employee’s child pays P 2 000, then the employee enjoys a benefit of P10 000, which must be taxed.
Refunds: Some employers allow employees to embark on a course of their choice, after which the employees get a refund from the employer upon successful completion of the course. If the courses are for the benefit of the employees, i.e. not mandatory for the employees to take the course in order for them to perform better at work, then the employees will be deriving a private benefit.
Further, most employees who get trained by employers are bonded for some period and that is a sign that the training was not necessarily for the sole benefit of the employees but also for the employer. In the latter case, there is usually no taxable benefit as such courses are initiated and highly regulated by the employer. Tax arises in cases where the courses are optional and not embarked on to further the employer’s business.
THE END OF THE MATTER
To wrap up, let me state that it is not possible to enumerate all the school fees arrangements that employers may have in place for employees. However, all that needs to be kept in mind is that the employees are supposed to be taxed on the benefit they enjoy from any such arrangements. Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below.
Jonathan Hore writes on behalf of Aupracon Tax Specialists and feedback can be relayed to HYPERLINK "mailto:email@example.com" firstname.lastname@example.org or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.
Seventy-seven years ago, on the evening of December 2, 1943, the Germans launched a surprise air raid on allied shipping in the Italian port of Bari, which was then the key supply centre for the British 8th army’s advance in Italy.
The attack was spearheaded by 105 Junkers JU88 bombers under the overall command of the infamous Air Marshal Wolfram von Richthofen (who had initially achieved international notoriety during the Spanish Civil War for his aerial bombardment of Guernica). In a little over an hour the German aircraft succeeded in sinking 28 transport and cargo ships, while further inflicting massive damage to the harbour’s facilities, resulting in the port being effectively put out of action for two months.
Over two thousand ground personnel were killed during the raid, with the release of a secret supply of mustard gas aboard one of the destroyed ships contributing to the death toll, as well as subsequent military and civilian casualties. The extent of the later is a controversy due to the fact that the American and British governments subsequently covered up the presence of the gas for decades.
At least five Batswana were killed and seven critically wounded during the raid, with one of the wounded being miraculously rescued floating unconscious out to sea with a head wound. He had been given up for dead when he returned to his unit fourteen days later. The fatalities and casualties all occurred when the enemy hit an ammunition ship adjacent to where 24 Batswana members of the African Pioneer Corps (APC) 1979 Smoke Company where posted.
Thereafter, the dozen surviving members of the unit distinguished themselves for their efficiency in putting up and maintaining smokescreens in their sector, which was credited with saving additional shipping. For his personal heroism in rallying his men following the initial explosions Company Corporal Chitu Bakombi was awarded the British Empire Medal, while his superior officer, Lieutenant N.F. Moor was later given an M.B.E.
Remember: bricks and cement are used to build a house, but mutual love, respect and companionship are used to build a HOME. And amongst His signs is this: He creates for you mates out of your own kind, so that you may find contentment (Sukoon) with them, and He engenders love and tenderness between you; in this behold, there are signs (messages) indeed for people who reflect and think (Quran 30:21).
This verse talks about contentment; this implies companionship, of their being together, sharing together, supporting one another and creating a home of peace. This verse also talks about love between them; this love is both physical and emotional. For love to exist it must be built on the foundation of a mutually supportive relationship guided by respect and tenderness. As the Quran says; ‘they are like garments for you, and you are garments for them (Quran 2:187)’. That means spouses should provide each other with comfort, intimacy and protection just as clothing protects, warms and dignifies the body.
In Islam marriage is considered an ‘ibaadah’, (an act of pleasing Allah) because it is about a commitment made to each other, that is built on mutual love, interdependence, integrity, trust, respect, companionship and harmony towards each other. It is about building of a home on an Islamic foundation in which peace and tranquillity reigns wherein your offspring are raised in an atmosphere conducive to a moral and upright upbringing so that when we all stand before Him (Allah) on that Promised Day, He will be pleased with them all.
Most marriages start out with great hopes and rosy dreams; spouses are truly committed to making their marriages work. However, as the pressures of life mount, many marriages change over time and it is quite common for some of them to run into problems and start to flounder as the reality of living with a spouse that does not meet with one’s pre-conceived ‘expectations’. However, with hard work and dedication, couples can keep their marriages strong and enjoyable. How is it done? What does it take to create a long-lasting, satisfying marriage?
Below are some of the points that have been taken from a marriage guidance article I read recently and adapted for this purposes.
POSITIVITY Spouses should have far more positive than negative interactions. If there is too much negativity — criticizing, demanding, name-calling, holding grudges, etc. — the relationship will suffer. However, if there is never any negativity, it probably means that frustrations and grievances are not getting ‘air time’ and unresolved tension is accumulating inside one or both partners waiting to ‘explode’ one day.
“Let not some men among you laugh at others: it may be that the (latter) are better than the (former): nor let some women laugh at others: it may be that the (latter) are better than the (former): nor defame nor be sarcastic to each other, nor call each other by (offensive) nicknames.” (49:11)
We all have our individual faults though we may not see them nor want to admit to them but we will easily identify them in others. The key is balance between the two extremes and being supportive of one another. To foster positivity in a marriage that help make them stable and happy, being affectionate, truly listening to each other, taking joy in each other’s achievements and being playful are just a few examples of positive interactions. Prophet Muhammad (PBUH) said: “The believers who show the most perfect faith are those who have the best character and the best of you are those who are best to their wives”
Another characteristic of happy marriages is empathy; understanding your spouses’ perspective by putting oneself in his or her shoes. By showing that understanding and identifying with your spouse is important for relationship satisfaction. Spouses are more likely to feel good about their marriage and if their partner expresses empathy towards them. Husbands and wives are more content in their relationships when they feel that their partners understand their thoughts and feelings.
Successful married couples grow with each other; it simply isn’t wise to put any person in charge of your happiness. You must be happy with yourself before anyone else can be. You are responsible for your actions, your attitudes and your happiness. Your spouse just enhances those things in your life. Prophet Muhammad (PBUH) said: “Treat your women well and be kind to them for they are your partners and committed helpers.”
Successful marriages involve both spouses’ commitment to the relationship. The married couple should learn the art of compromise and this usually takes years. The largest parts of compromise are openness to the other’s point of view and good communication when differences arise.
When two people are truly dedicated to making their marriage work, despite the unavoidable challenges and obstacles that come, they are much more likely to have a relationship that lasts. Husbands and wives who only focus on themselves and their own desires are not as likely to find joy and satisfaction in their relationships.
Another basic need in a relationship is each partner wants to feel valued and respected. When people feel that their spouses truly accept them for who they are, they are usually more secure and confident in their relationships. Often, there is conflict in marriage because partners cannot accept the individual preferences of their spouses and try to demand change from one another. When one person tries to force change from another, he or she is usually met with resistance.
However, change is much more likely to occur when spouses respect differences and accept each other unconditionally. Basic acceptance is vital to a happy marriage. Prophet Muhammad (PBUH) said: “It is the generous (in character) who is good to women, and it is the wicked who insults them.” “Overlook (any human faults) with gracious forgiveness.” (Quran 15:85)
COMPASSION, MUTUAL LOVE AND RESPECT
Other important components of successful marriages are love, compassion and respect for each other. The fact is, as time passes and life becomes increasingly complicated, the marriage is often stressed and suffers as a result. A happy and successful marriage is based on equality. When one or the other dominates strongly, intimacy is replaced by fear of displeasing.
It is all too easy for spouses to lose touch with each other and neglect the love and romance that once came so easily. It is vital that husbands and wives continue to cultivate love and respect for each other throughout their lives. If they do, it is highly likely that their relationships will remain happy and satisfying. Move beyond the fantasy and unrealistic expectations and realize that marriage is about making a conscious choice to love and care for your spouse-even when you do not feel like it.
Seldom can one love someone for whom we have no respect. This also means that we have to learn to overlook and forgive the mistakes of one’s partner. In other words write the good about your partner in stone and the bad in dust, so that when the wind comes it blows away the bad and only the good remains.
Paramount of all, marriage must be based on the teachings of the Noble Qur’an and the teachings and guidance of our Prophet Muhammad (PBUH). To grow spiritually in your marriage requires that you learn to be less selfish and more loving, even during times of conflict. A marriage needs love, support, tolerance, honesty, respect, humility, realistic expectations and a sense of humour to be successful.
The past week or two has been a mixed grill of briefs in so far as the national employment picture is concerned. BDC just injected a further P64 million in Kromberg & Schubert, the automotive cable manufacturer and exporter, to help keep it afloat in the face of the COVID-19-engendered global economic apocalypse. The financial lifeline, which follows an earlier P36 million way back in 2017, hopefully guarantees the jobs of 2500, maybe for another year or two.
It was also reported that a bulb manufacturing company, which is two years old and is youth-led, is making waves in Selibe Phikwe. Called Bulb Word, it is the only bulb manufacturing operation in Botswana and employs 60 people. The figure is not insignificant in a town that had 5000 jobs offloaded in one fell swoop when BCL closed shop in 2016 under seemingly contrived circumstances, so that as I write, two or three buyers have submitted bids to acquire and exhume it from its stage-managed grave.