Car Allowance & Tax implications

Slaught3r

Slaught3r

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Hey guys, I was hoping there was someone here who could help me on some questions I have around taking a car allowance and what the tax implications are?

If you know your stuff, please PM me? I currently have a company car (well - HAD it is at a panelbeater most probably going to be written off) and the new tax introduced this month is absolute murder!

I am thinking of switching to a car allowance - albeit a VERY small annual amount....

Please can someone help?

Thanks!
 
Rather discuss it in the open than via PM..you'll get better results.

Resident tax experts are Celine & Siris. I'm not up to date of the latest changes so I think I'll skip this one.
 
Cool, thanks....

Okay this is what I wanted to discuss/get thoughts on;
If you select a car allowance you are required to keep a log book for submission at year end. I do not necessarily do the mileage to justify the allowance, although I live 40km away from my office (80km round trip daily) I do not do BUSINESS mileage to justify an allowance - just the odd travel to our other offices in Midrand/Sandton/Riverclub.

My question (and this is purely more out of wanting to use the allowance to secure a car with minimal deposit) is IF I take a small allowance (let's say 2k a month where the total repayment = 4k) and I do not claim any mileage as business mileage from SARS, will they hit me with a moerofa claim come tax year end?

What are the implications of me taking an allowance and NOT doing the 14000km P/A business mileage (or whatever the split is now)? I rack up about 28000km P/A just traveling to work and back...
 
You need actual business use for the travel allowance to work. Essentially (Cash Received - Business Use) is added to your taxable income. The traveling to & from work thing is useless for tax purposes...you can't do anything with it.

Tax laws don't contain anything on a "car allowance" afaik. You get either a Travel Allowance, or a Right of Use fringe benefit. For the Right of Use the car must belong to the company. I think one can also rent the car to the company and they then give you the right of use...but its full of anti-avoidance provisions & SARS takes a dim view of this angle.

Like I said, I'm not up to speed on the 2012 changes, so can't comment on the need right of use rules. The basic principle will be the same though: If there isn't real business use you'll get taxed.
 
We have a remuneration spreadsheet where you enter your CTC and it runs a macro to determine what kind of tax you will be responsible for. When I enter normal earnings without an allowance vs with a 2k allowance there is about a R100 because of the fringe benefit you get from the allowance. Is that not the only tax you will be responsible for at year end - if you didn't do the necessary mileage?

Thanks for the feedback - I appreciate it!
 
Ask the company to deduct tax from the full traveling allowance. Come year end and you have no claim you will not end up with a huge assessment.
 
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