HomeHome SearchSearch MenuMenu Our productsOur products

Today our experts answer two of your burning company car questions...

by , 15 December 2016
Today our experts answer two of your burning company car questions...A company car is a vehicle your company provides an employee for business purposes and sometimes private use.

But don't be fooled by this simple definition. Dealing with company cars is complex - and not just when dealing with PAYE! The questions our tax experts get on this topic are proof of this.

Continue reading to discover our expert's answers to two burning company car questions...


The company car
An employee's favourite perk...
An accountant's little time bomb

 
Taxing employees on their use of company cars is not as simple as you might think. Travel expense claims and deductions are one of the most common triggers for a SARS audit.

In fact, if you get it wrong you'll face penalties of up to 200% from SARS. And to top it off your employees will either pay too much tax or not enough. Either way, the admin to sort it out is just not worth your time.
    
The good news is that 90+% of the penalties involve only 
four mistakes that you can easily disarm today…


The answers to two very common company car questions
 
Question #1: My employee wants to buy the car from the company after his right to use it as a company car comes to an end. What should I do in this case?
 
Tax experts behind the
 Practical Tax Handbook explain that if your company sells the car to the employee at market value or at the depreciated value, your employee won't have a tax liability.
 
But if your company sells the car to him at a price below the market value, this is a taxable fringe benefit. Your employee will have to account for tax on this.
 
Also 
check out this article. It explains further what you need to do when an employee wants to buy a company car.

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!
 
Just updated!  
  • 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.
The Practical Tax Loose Leaf Service is a full service tax consultancy you can use every day!

Click here to get yours now

Question #2: What happens with a leased car? We want to buy the car on behalf of the employee. The agreement is that he must pay us back. I want to know if there's a tax saving here.
 
According to our experts, in the case of a financial lease, you must register the lease in your name as an employer. Your company will own the car and the vehicle will remain a company car, even if the intention is that your employee will buy it from the company.
 
If your company pays the premium on the employee's behalf and recovers the premium amount from him (without giving him a benefit), he won't be taxed on this. After all, the situation would be the same as if he (employee) had paid the premium himself.
 
There you have it. We hope these answers have given you some clarity on company cars.
 
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 problems right now and avoid
being hunted down by SARS for making costly mistakes.
Click here to find out more

Make it a compulsory company policy that your staff keep accurate logbooks if they make use of the company car. Download a sample template of the SARS approved here.



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 >>>