Page 241 - SAIT Compendium 2016 Volume2

IN 14 (3) Income Tax acT: InTeRPReTaTIon noTes IN 14 (3)
• an assistant who is employed to work as a shop assistant at a V&A Waterfront store in Cape Town (the employer has stores all over South Africa, including other stores in the Cape Town area) travels from a friend’s house to the V&A Waterfront store, the travel between the friend’s house and the store; and
• an assistant who is employed to work as a shop assistant at a V&A Waterfront store in Cape Town for two days a week and the Canal Walk Store in Cape Town for three days a week (the employer has stores situated all over South Africa, including other stores in the Cape Town area) travels from home to a store, the travel between home and the Canal Walk Store, or the V&A Waterfront store as appropriate.
Examples of business travel include, where –
• an employee whose place of employment is in Johannesburg leaves the of ce at lunch time to attend a business
conference in Krugersdorp, the travel between the of ce and the conference venue in Krugersdorp;
• a consultant stops to see a client en route to his place of employment, the travel between home and the client’s
premises and the travel after the meeting from the client’s premises to the of ce;
• a sales assistant who normally works at an employer’s store in the V&A Waterfront, Cape Town travels directly from home
to the employer’s store in Pretoria to assist with an annual stock count, the travel between home in Cape Town and Pretoria;
• an employee located in Kimberley is required to assist a client in Upington over a ve-day period, the travel from
Kimberley to Upington;* and
• a computer programmer, who is allowed to work from home on a permanent basis (that is, the home of ce is the place
of employment) travels to a client’s premises to discuss system requirements and functionality, the travel from the
home of ce to the clients’ premises.
The examples listed above are merely guidelines to explain the principles involved. Each case must be examined and assessed based on its own unique set of facts.
5.4.3 Expenditure per kilometre – actual costs
In order to be able to use actual costs in determining the amount of the allowable deduction, recipients will need to perform an acceptable calculation based on accurate data. An acceptable ‘expenditure per kilometre’ calculation will contain two elements, namely, total kilometres travelled† and the total expenditure incurred by the recipient.‡ The calculated rate per kilometre would then be multiplied by the business kilometres travelled (see 5.4.2) to determine the allowable deduction.
Recipients must retain supporting documentation in order to prove, if requested, the accuracy of the calculation and the data used.
The recipient’s use of the motor vehicle to travel must have given rise to the expenditure. In ITC 1731§ a lease termination payment was held to be related to the termination of the lease and the acquisition of ownership of the vehicle and not to have been an expense incurred as a result of travelling. It accordingly did not fall within the provisions of section 8 (1)(a) and (b).
Examples of the type of expenditure which may be included are wear-and-tear or lease payments, fuel, oil, repairs and maintenance, car licence, insurance and nance charges.
The expenditure related to nance charges and depreciation are based on actual costs subject to limitations as set out in section 8 (1) (b) (iiiA). Section 8 (1) (b) (iiiA) provides –
• that in relation to a leased vehicle, the lease payments included may not exceed the xed cost element determined in
the Gazette for the particular category of vehicle (see 5.4.4); and
• in all other cases –
- wear-and-tear must be determined over a seven-year period from the original date of acquisition by the recipient;
- the cost of the vehicle must be limited to R480 000;¶ and
- the nance charges incurred for any debt incurred for the purchase must be limited to an amount which would have
been incurred had the original debt been R480 000.**
Example 9 – Travelling deductions where record of actual expenses was kept
Facts:
S received a travel allowance of R96 000 during the 2013 year of assessment. A total of 23 881 kilometres was travelled during the year, of which 7 338 kilometres was for business travel. S purchased a motor vehicle on 1 March 2008 and it has a value of R353 248. S kept proof of the following travelling expenses:
Fuel and oil
Maintenance and repairs
Insurance and licence fees Wear-and-tear (R353 248 / 7 years) Finance charges
Total costs
R
26 910
4 422 15 327 50 464 32 880
130 003
* The employee will also incur additional business travel while in Upington, for example, travelling from the guesthouse to the client’s premises and travelling to the shops to get supplies
† Calculated rate per kilometre = total expenditure / total kilometres travelled.
‡ Calculated rate per kilometre = total expenditure / total kilometres travelled.
§ 64 SATC 395.
¶ This value is effective from years of assessment commencing on or after 1 March 2011. ** This value is effective from years of assessment commencing on or after 1 March 2011.
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