The company car is often an employee’s favourite perk
In reality, it is an accountant’s little ticking time bomb
A company car is a great perk but the tax that is levied on this perk, is not as simple as many of these employees might think. Travel expense claims and deductions are one of the most common triggers for a SARS audit. This does not mean that SARS will not allow these claims. The expenses must be accurately and completely processed and submitted.
If you do not submit these claims according to SARS’s requirements you CAN face penalties of up to 200% for this error. Because this is largely to do with the monthly PAYE payment on these claims, 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. To be safe, get it correct and 100% accurate first and you will not face any issues. Ensure this correct practice by educating yourself first. Once this is done, then educate your staff regarding this. Many employees do not know or understand this tax. If you are in any doubt, consult an accountant or tax specialist about those doubts.
Good news: SARS will let you claim input tax on these seven company cars
You can claim the input tax on the purchase or rental of the following vehicles:
1. Delivery motorcycles;
2. Goods transportation trucks;
3. Single-cab light and heavy delivery vehicles;
4. Vehicles with an unladen mass of 3 500kg or more;
5. Buses for transporting staff, if the unladen mass exceeds 3500kg
6. Other special purpose vehicles and equipment, e.g.bulldozers,graders, combine harvesters, tractors and ambulances
7. Hearses and game-viewing vehicles.
Important: When it comes to motor vehicle input tax claims, it’s not what you use the car for that has an impact on its tax calculation. It’s all got to do with the nature of the car.