A worker receives a fixed amount of R 5,000 per month for the use of his personal vehicle to travel for business in the course of his duties. An amount of R5,000 – 12 months – R60,000 is expected to be under code 3701 on the IRP5, which is issued annually around May/June. If the worker has kept a proper logbook during the year, a fee of up to R60,000 can be deducted from his or her income. If the R60,000 claim is greater than R60,000, SARS would limit the deduction to the amount of Codes 3701, 3702 and 3722 (these are all local travel codes that we will review later) In previous years, the presentation of a logbook containing detailed business miles was sufficient to justify your travel application. This year, sars is asking to see the purchase contract of the vehicle to validate the price of the vehicle, the date of purchase and the date of the purchase, to ensure that it is on behalf of the taxpayer. This can be a problem if, for example, the vehicle you are driving is in your partner`s name. In this case, you must prove to SARS that even if the vehicle is not registered on your behalf, you still make payments for the vehicle – this can be done through an affidavit and bank statements that reflect the repayments of your bank account. The worker may claim to use a company car provided that a valid logbook, as explained above, has been kept for record of business miles. The percentage in which the vehicle was used for businesses can be deducted from the total amount of aid. In Code 3802 (Taxable Benefit for the Use of the Vehicle Provided by the Company) R214 500 (Calculated in 3.25% – 12 months – R550,000) An individual with a travel refund of R 150,000 km, 10,500 km were travelled between April 1, 2018 and February 28, 2019 with a vehicle valued at R500,000,000.
Calculate the travel request: I`ve also seen that some taxpayers don`t understand why some of their car payments can`t be deducted. Like the above rent, you should be able to clearly provide the weather agreement, which calculates the interest on the vehicle. Also keep in mind that only interest can be deducted as an effort. It`s another sticky area. SARS will always want a taxpayer to prove their rental costs. A rental agreement that clearly shows the rental costs is ideal here. For taxpayers who earn rental income, they must submit the following documents to justify their expenses: The best is when you use your own car for business trips. The purchase advantage of this car was not part of your annual salary package. This means that your employer has not granted you car compensation, but is using your vehicle for official business trips. When filling out and submitting your IRP5 documents, we learned that you may need to consider the following key points: A company car is exposed under code 3802 on an IRP5. When an employer makes available to an employee a company vehicle, a monthly ancillary benefit of 3.5% or 3.25% of the value of the vehicle, including VAT, is added to their income, depending on whether a maintenance plan has been included or not.
(Fuel costs should not be included in addition to the above amount.) This means that 39% (3.25-12) or 42% (3.5-12) of the value of the car are included as income for the worker. (This amount may be reduced by the amount the employee pays to the vehicle.) Therefore, if you receive a refund for travel expenses or if you are an individual contractor or an independent contractor and you are requesting a travel withdrawal, be sure to submit both your logbook and your vehicle purchase record. Below is an excerpt from the SARS tax schedules for fiscal year 2019.