Are you 100% clear on how you can shrink your company car tax bill?
If not, then spend two minutes reading this. I guarantee you'll save thousands off your company car tax bill.
Stick to these four company car tax rules to make sure you calculate your saving correctly. Let's have a look...
The Practical Tax Loose Leaf Service represents 11 years of tradition, prestige and value!
The Practical Tax Loose Leaf Service first published in May 2003!
Last updated: May 2014!
Over 500 pages of definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
167 Case studies and practical examples that show you what elements you should consider for your taxes to be perfect;
83 Red flags you need to watch out for and the penalties you'll face if you don't respect them;
Six sample templates at your disposal, ready to be filled in, customised and printed.
Four company car tax rules
1. You tax private use only!
This is any travelling you do that's not for business purposes. This includes the trip between home (place of residence) and the office or the place of employment. If you work from home, then all your travel to clients is considered business travel.
2. You tax this perk at 3.5% of the car's determined value each month
The determined value is the original cash cost of the car including Vat, but excluding finance charges or interest. It includes the cost of the maintenance plan, if the car was under this maintenance plan when you bought it.
The car's determined value includes the cost of any original accessories (e.g. electric windows or fancy mag wheels). If accessories are added later, you must tax the employee on these added extras.
This doesn't hold true for security or anti-hijack systems. If the cost of installation is separately identifiable when you're buying the car, then exclude these costs from the car's determined value.
You don't tax the employee on these costs.
If your employee has more than one company car, you must calculate the determined value on the car with the higher value of private use. This is unless SARS stipulates that you have to use some other figure. Keep in mind that SARS must be satisfied that each car was indeed used by your employee for business purposes.
Let's look at the other two rules you need to stick to.
The company car. An employee's favourite perk. An accountant's little time bomb.
Spending time trying to calculate all the variables of company cars vs. travel allowances can be frustrating not to mention complicated.
3. Now you tax the employee on 80% of this perk, for PAYE
4. No logbook, no claim
SARS has made it clear that without a logbook to substantiate your tax deduction, you can't claim it. You can't reduce the amount subject to employee's tax by the business kilometers travelled unless the business kilometers represents more than 80% of the total usage of the vehicle.
Until next time