Vehicle Allowance

K

KulRath

Well-Known Member
Joined
Apr 15, 2008
Messages
252
Reaction score
9
Morning,

I've recently been promoted and with the new position comes a car allowance.
The allowance is in the range of R3500.00. With that I need to cover repayments and insurance (any money to spare would go into savings for tires and maintenance down the road)

My questions:
1) How much will that amount be taxed? ie. how much will I actually have to work with?
2) Do you have any recommendations in terms of vehicles in that price range? New/used?

I will be doing a fair amount of mileage; I would prefer a hatchback; it needs to be reasonably economical even though the company pays for the petrol.

Any advice will be appreciated, thanks.
 
Ah yes thanks; it's a travel allowance, so 80% of it is added to your salary and then taxed according to your tax bracket?
 
yes.

And if you keep a proper log book of all your business km's travelled, you can be assured of a nice refund come next tax yearend..
 
"80% of the travelling allowance must be included in the employee’s remuneration for the purpose of calculating PAYE. An exception is allowed in cases where the employer is satisfied that at least 80% of the use of a motor vehicle will be for business purposes. In this instance, only 20% of the travel allowance must be included in the employee’s remuneration."

I need to convince my employer to go for that ;)
 
On R3500 you won't pay tax on R700, the rest you will pay tax at your marginal rate of tax, at the end of the tax year you have to justify at least those 20% that you didn't pay tax on, obviusly when using the car for work you will justify the whole R3500 by keeping your log book, maintenance invoices and etc., you can also claim depreciation or car repayments, so that meants that when tax season starts you will get a nice bonus from SARS. However if you want to see the the tax benefits on a monthly basis than you need to ask your employer to increase your travel allowance, but you need to be sure that you won't come short when tax season comes, aslo as an unwriten rule your travel allowence shouldn't be more than 30% of your full package.
 
KulRath said:
"80% of the travelling allowance must be included in the employee’s remuneration for the purpose of calculating PAYE. An exception is allowed in cases where the employer is satisfied that at least 80% of the use of a motor vehicle will be for business purposes. In this instance, only 20% of the travel allowance must be included in the employee’s remuneration."

I need to convince my employer to go for that ;)
Click to expand...

Be careful, like Faetsa says if you opt for this there is always the possibility of a pay in for you at the end. The 20% vs 80% thing doesn't make a difference on your tax liability for the year, it just makes a difference if you want to pay it monthly or yearly in the end.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X