Author: Dave Beattie
Meals provided by employers to employees are generally not considered a taxable fringe benefit. It’s important to look at the specific circumstances though as in some cases the ‘nil value’ fringe benefit applies and in other cases there is a taxable fringe benefit.
The ‘nil value’ fringe benefit (benefit not taxable) would apply in the following circumstances:
- Meals provided on the business premises: Meals and refreshments are supplied to employees in a canteen or dining room operated on or on behalf of the employer and located on the business premises.
- During work hours: Meals provided during normal or extended business hours.
- On special occasions: Meals and refreshments provided on special occasions, such as year-end functions.
- While entertaining clients: Meals enjoyed by an employee while entertaining a client on behalf of the employer.
The following are examples of cases where the provision of meals is a taxable fringe benefit:
- Meal vouchers: When an employer provides meal vouchers that can be used at third-party restaurants, the cash equivalent of the voucher is a taxable fringe benefit. This is particularly relevant where vouchers are provided to employees for good performance in the workplace or achieving certain targets.
- Reimbursements for daily travel: If an employee is reimbursed for meals while on a day trip away from their usual place of work, the reimbursement is subject to limits set by the South African Revenue Service (SARS) annually (R 176 for the 2026 tax year). Any amount reimbursed above this limit, or for which no proof of expenditure is provided, is fully taxable. This reimbursement must not be confused with daily subsistence rates for overnight business travel. This is a reimbursement, and the overnight subsistence payments are allowances.
- Part of an accommodation benefit: If meals and board are provided along with residential accommodation, they are taxed as part of the overall accommodation benefit.
Employers have a responsibility to ensure legislative compliance in this space by differentiating between situations that meet the ‘nil value’ fringe benefit and those that are a taxable benefit. Mistakes in interpretation are likely to be picked up during SARS audits and this could prove costly to employers in terms of outstanding PAYE, additional tax, late payment penalties, and interest owing to SARS. If you’re needing some clarification, reach out to one of the HRTorQue team, we’re here to help.