Is this legal?

Pho3nix

Pho3nix

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Lets jump straight to the point.

I have a car/house/boat
My company (personal) pay's off car/house/boat and buys it from me.
Sells it back to me for R1.

Legal?
 
don't see any legal issue, but I'm no legal expert.
I would think there may be a tax and audit/governance issue though
 
Pho3nix said:
Lets jump straight to the point.

I have a car/house/boat
My company (personal) pay's off car/house/boat and buys it from me.
Sells it back to me for R1.

Legal?
Click to expand...

I am not sure about the legalities, but at the very least you will have a hard time explaining that transaction in an Audit.
 
werfie said:
I am not sure about the legalities, but at the very least you will have a hard time explaining that transaction in an Audit.
Click to expand...

ScottulusMaximus said:
It's active tax evasion, that's a bigg'un
Click to expand...

:D Well figured I'd ask.
So better for company to just buy the items from the on-set?

Maybe I should rope @signates here, is the only way to pay off the car etc. to get the income in as a bonus(?), declare it under person x's tax return and feel the warm embrace of SARS take their cut?
 
Is there anything illegal in South Africa? In actual daily practice I mean?
 
Pho3nix said:
Lets jump straight to the point.

I have a car/house/boat
My company (personal) pay's off car/house/boat and buys it from me.
Sells it back to me for R1.

Legal?
Click to expand...

No sure... But demanding hotwings from a poor Black girl from Africa is.... :D:D
 
Pho3nix said:
Lets jump straight to the point.

I have a car/house/boat
My company (personal) pay's off car/house/boat and buys it from me.
Sells it back to me for R1.

Legal?
Click to expand...

Yes, it is, provided the following requirements are met:

- When the company is paying off your asset, there is a taxable fringe benefit on your payslip/IRP5.
- When an asset is sold to a connected person, the value for tax purposes is the higher of the cost or market value.

What this means is that you cannot reduce your tax exposure following this method; it is still more beneficial to just purchase the vehicle through the company (a single cab is best as you can claim the input VAT thereon). There will still be a taxable fringe benefit on your payslip/IRP5 though.

Hope this helps.
 
CarsinemiA said:
Yes, it is, provided the following requirements are met:

- When the company is paying off your asset, there is a taxable fringe benefit on your payslip/IRP5.
- When an asset is sold to a connected person, the value for tax purposes is the higher of the cost or market value.

What this means is that you cannot reduce your tax exposure following this method; it is still more beneficial to just purchase the vehicle through the company (a single cab is best as you can claim the input VAT thereon). There will still be a taxable fringe benefit on your payslip/IRP5 though.

Hope this helps.
Click to expand...

Thanks :)
 
Pho3nix said:
Lets jump straight to the point.

I have a car/house/boat
My company (personal) pay's off car/house/boat and buys it from me.
Sells it back to me for R1.

Legal?
Click to expand...

Always legal. As long as you pay the associated taxes.

I think you tax scheme might cost you more in the end though
 
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