2015 Car Allowance

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GasCanZa

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Hi Guys.

So here is my question regarding a car allowance.

If I receive a R10 000 car allowance every month. Is it better for me to use close to the full amount on a car and insurance? Or does it not really matter how much of the Car allowance I actually use on a private vehicle.

My company provides the fuel so my question again is if I buy a car for R4000 a month or R6000 a month, is there a big difference in tax savings or would I be able to claim more every year the closes I get to the R10 000?
 
GasCanZa said:
Hi Guys.

So here is my question regarding a car allowance.

If I receive a R10 000 car allowance every month. Is it better for me to use close to the full amount on a car and insurance? Or does it not really matter how much of the Car allowance I actually use on a private vehicle.

My company provides the fuel so my question again is if I buy a car for R4000 a month or R6000 a month, is there a big difference in tax savings or would I be able to claim more every year the closes I get to the R10 000?
Click to expand...

Yes they tax it big time if not used fully
 
I also get a car allowance, and I don't see how it would be taxed differently whether it's used or not. At the end of the day all the car allowance gets paid together with basic salary and will be taxed.

I bought a car and paid it off, now I pocket the allowance and I didn't notice a change in tax.
 
Zuner said:
I also get a car allowance, and I don't see how it would be taxed differently whether it's used or not. At the end of the day all the car allowance gets paid together with basic salary and will be taxed.

I bought a car and paid it off, now I pocket the allowance and I didn't notice a change in tax.
Click to expand...

Does not work like that.
Car allowance tax is based on vehicle price, mileage and maintenance cost.
Based on that, the car allowance amount is calculated.
If its more than the amount the Company gives you (max allowance is 20% of your CTC i think) then it will be reduced.
If its less, then the difference is added back to your taxable income.
 
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This is what I don't understand. We have reps at our company and all get the same car allowance. Comes tax month they all get around the same tax back even if they pay for a vehicle every month or payed off a vehicle.
 
Im still missing the answer to the question above, if the car allowance is R10000 will it benefit me to increase my installments on my personal car used for business to get as close to the allowance for the tax benefit?

Perhaps if someone can assist with figures, if the full amount is used and if only R5000 is used for example...
 
Has nothing to do with your installments, you can buy a car cash if you like or use your old one that's paid off. It has to do with the value of the vehicle and the amount of business km you do(must keep a logbook).

eish people, reading... it's science

http://www.treasury.gov.za/documents/national budget/2015/sars/Budget PocketGuide 2015-16.pdf

If you don't keep a log book the 10k is no different to 10k for sweets money in your pocket even if you buy and use a car. 100% included in taxable income.(they add it to your income and you pay tax on it like any income)

now in simple terms lets say 50% was business km... you see where this is going only half included as sweets money(this is now very simplistic there's more to it but it's the idea behind it)
 
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Vegeta said:
Has nothing to do with your installments, you can buy a car cash if you like or use your old one that's paid off. It has to do with the value of the vehicle and the amount of business km you do(must keep a logbook).

eish people, reading... it's science

http://www.treasury.gov.za/documents/national budget/2015/sars/Budget PocketGuide 2015-16.pdf

If you don't keep a log book the 10k is no different to 10k for sweets money in your pocket even if you buy and use a car. 100% included in taxable income.(they add it to your income and you pay tax on it like any income)

now in simple terms lets say 50% was business km... you see where this is going only half included as sweets money(this is now very simplistic there's more to it but it's the idea behind it)
Click to expand...

They don't ask you the value of the car, they ask you the purchase price
 
According to the company doing my interview. SARS views travel from home to work as business travel.
 
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