HomeHome SearchSearch MenuMenu Our productsOur products

Your employee just crashed the company car! Now what?

by , 09 June 2014
Every employer's worst nightmare: You give your employee the use of the company car and everything seems fine. He uses the car for his business.

But then, while he's on a business trip, he gives you a call. Your lovely company car is now a squashed ball of metal.

So what do you do when one of your most expensive assets is now useless? Surely this is a massive loss for your company.

Not entirely. SARS can help in situations like these. There's an allowance here that could turn that car write-off into a tax write-off too.

Read on to discover the tax allowance that lessens the loss of a crashed company car...

*********** Hot off the press  ************
Confused about car and travel allowances? 
 
Get expert answers to the 69 most frequently asked company car and travel allowance questions 
If you've ever turned to Google to get answers to your company car or travel allowance questions, you know there are thousands of pages to search through...
 
And how do you know if the answers you get are correct?!
 
That's why we've teamed up with two leading tax experts to give you the expert company car and travel allowance answers you need.
 
*************************************

Did you know: You can claim a scrapping allowance on a useless asset?

If your employee writes off your company car in an accident, the car is now useless. This means you can claim a scrapping allowance.
 
According to the Practical Tax Loose Leaf, there's no actual definition of 'scrapping' in the Income Tax Act, but the courts have stated that:
The taxpayer must decide to scrap the asset because it's now useless to them. The termination of the assets normal business use follows this decision. 
 
This means you can scrap your company car and claim the tax deduction for it from your income tax
 
But before you do that, there's some important things you need to know about the scrapping allowance…
 
*********** Product endorsement ************
Legally pay less tax
 
*****************************************

Four important things you need to remember about a scrapping allowance

1. You can only deduct the scrapping allowance if it happens during the course of running your business;
2. You can't claim a scrapping allowance if you sell or abandon your business;
3. You don't need to replace the asset once you've scrapped the old one; and
4. You can scrap an asset because you want to replace it with a newer model.
 
So there you have it: Use this business deduction to recover the loss of the company car your employee crashed and take the tragedy out of an unfortunate situation.


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 >>>