HomeHome SearchSearch MenuMenu Our productsOur products

If you let your employees use more than one company car, use this method to work out their tax

by , 18 June 2014
SARS is very strict when it comes to company cars. One wrong move when you make your calculations is sure to get you penalties and interest.

The good news is you can avoid the wrath of SARS if you have the knowhow.

Read on to find out how to work out tax if you let your employee use more than one company car.

Here's how to tax your employee if he gets the use of more than one company car

The Practical Tax Loose Leaf Service says if you've given your employee the use of more than one company car, you must use the car with the highest value of private use to calculate the fringe benefits tax.

Here's an example of how you'd do this…

*********Readers' choice********

Put a stop to all your company car and travel allowance headaches today with this one tool

Get the answers to your biggest company car and travel allowance questions right now and avoid being hunted down by SARS for making costly mistakes.

Click here to get 69 solutions that'll put your company car and travel allowance headaches to rest.
 

******************************

Use this example as a guide if you're not sure how to tax your employee if he gets the use of more than one company car

Mr Khumalo is a director of Martcorp Ltd and has two company cars. The one is used by him and the other by his wife.

The determined values of the vehicles are R400 000 (a Mercedes Benz) and R350 000 (a Toyota). Martcorp Ltd pays for all the maintenance and fuel for the vehicles.

You must use the determined value of the car with the highest determined value for both cars.

This means Mr Khumalo will have the following fringe benefit included in his taxable income: Mercedes Benz: R400 000 @ 3.5% = R14 000 per month. Toyota: R350 000 @ 3.5% = R12 250 per month.

You'll select the highest private value, which means you ignore the Toyota's amount of R12 250. His total taxable fringe benefit is R14 000 x 2 cars = R28 000 per month.

Now that you know how to work out tax when an employee gets the use of more than one company car, remember these two points…

**********Recommended product***********

Every South African tax law explained by our experts

The Practical Tax Loose Leaf Service offers you:

  • All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
  • Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
  • Red flags you need to watch out for and the penalties you'll face if you don't respect them.
  • Sample templates at your disposal, ready to be filled in, customised and printed.

Click here for more details.

***************************************

 

If you've given your employee the use of more than one company car, remember the following:

  1. Make sure he uses both cars for business purposes.
  2. Even though the general rule is that you must use the car with the highest value of private use when you calculate the fringe benefits tax, SARS might instruct you to use the value of the other car if it so chooses.

Now that you know how to work out tax when your employee uses more than one company car, make sure your calculations are correct so you can avoid SARS penalties.



Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>