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'My employee doesn't use our company car all the time. Can I use this fact to shrink the fringe benefit tax'?

by , 18 June 2014
This week the spotlight is on company cars.

The reason?

Well, our tax experts have received a lot of questions regarding company cars. And we believe this indicates that company cars are still a thorny issue for most business owners.

One of the questions our experts recently received comes from Anna. She wants to know if SARS will allow her to shrink the fringe benefit tax since her employee doesn't use the company car all the time.

Continue reading to find out the answer so you'll know what to do if you find yourself in a similar situation.

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Here's the answer if you're wondering about tax if your employee doesn't use the company car full time

You can't shrink the fringe benefits tax if your employee doesn't use the company car all the time, says the Practical Tax Loose Leaf Service.

If, for example, your employee travels overseas on a business trip during the month for two weeks and you're thinking of cutting his fringe benefit tax in half that month, since he didn't use the car, SARS won't allow it!

So don't even try to make this reduction.

The only time you can do this is if your employee starts using the car for the first time, midway through a month, or uses the car for the last time midway through the month.

For example, you give Sipho the right to use the car during a particular month, say, on the 15th of the month. In this case, SARS will allow you to adjust the taxable value of the fringe benefit using daily apportionment. That way, you won't tax him on the full month's use of the car.



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