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Do you know the Vat implications when it comes to these two business travel expenses?

by , 01 August 2014
Travel is an important part of business.

Perhaps the unfortunate part is it comes with Vat consequences. And if you make one wrong move, SARS will slap you with harsh penalties.

But we've got you covered.

If you're one of the many business owners who feels business travel is adding to your Vat headaches, keep reading to find out about the Vat implications when it comes to these two common business travel expenses so you'll never make errors and incur penalties.


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Two common business travel expenses and their Vat implications


Business travel expense #1: Car rental
 

Vat is charged at 14% on car rental in South Africa.
 

The bad news is you can't claim this as an input deduction.
 

Experts behind the Practical Vat Loose Leaf Service say the reason for this is the same reason SARS disallows the input deduction when one buys a motor car – it's a passenger vehicle.
 

SARS' rationale behind this approach is that if it allows car rentals as input deductions, companies would rent cars for staff rather than buy them.
 

But it's not all bad news.
 

Even though SARS won't allow you to claim input tax on the rental of a car, you can claim Vat on the insurance, damage, excess and accident administration charges. So remember to claim these amounts on every car hire transaction.
 

Business travel expense #2: Meals and refreshments (including liquor)
 

You can claim the input tax charged on meals.
 

But, if you take clients to dinner, you can't claim input tax on their meals and refreshments, because this is entertainment.
 

There you have it: We hope knowing about the Vat implications when it comes to these two business travel expenses will ease your Vat headaches and help you avoid errors and penalties.

 

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