Let's first look at the criteria on company cars
A vehicle is a company car, if:
• It's available and used by employees in general,
• The employee uses it ,
• Its personal use is incidental to its business use, and
• Your employee doesn'tkeep it at, or near, his home outside of working hours.
Consider these criteria to see if it's a fringe benefit
When looking a fringe benefit, the opposite applies. It's a car your company provides that:
• The employee sometimes enjoys private use of,
• The employee's use is not business-related, and
• An employee takes it homewith him.
If your employee uses it for these reasons, then it's a fringe benefit and it's taxable
******* Look at this *********
On 1 March every year the Tax laws change.
And you need to make sure you implement the changes correctly, so you don't make mistakes and cost your company money.
Why not consult The Practical Tax Loose Leaf Service?It's a full service tax consultancy you will useevery day!
Here's the formula to calculate tax on a car, as a fringe benefit
Cost of the company car (the initial cost)
output tax payable
Let's put the formula into practice
Diva Divine Dance Co.gives cars to all their sales reps. each car costs R200 000.
= R 736.84
Now you know how to determine whether a company car is a fringe benefit and how to calculate the tax on it. Remember this when filing your next return and avoid making any blunders.