Page 242 - SAIT Compendium 2016 Volume2

IN 14 (3) Income Tax acT: InTeRPReTaTIon noTes
IN 14 (3)
Result:
Travel allowance received
The deduction for business travel will be calculated as follows:
(Total costs / total kilometres) x business kilometres
= (R130 003 / 23 881 km) × 7 338 km
S is entitled to the full deduction of R39 946 against the travel allowance and must include R56 054 (R96 000 – R39 946) in taxable income.
5.4.4 Expenditure per kilometre – deemed rate per kilometre
The deemed rate per kilometre, which is determined by the Minister of Finance by notice in the Gazette, has the following three components:
• A xed component – the rand value per the cost scale table (explained below) must be divided by the total
kilometres (private and business) travelled in the year of assessment and must also be apportioned if the vehicle was only used for business purposes for part of the year. Apportionment is based on the days in a full year, in other words it is irrelevant if a day is a business day, a Saturday, Sunday or public holiday.
• A fuel cost component – this component may only be included if the recipient bears the full cost of fuel. Employees who are provided with employer-owned petrol or garage cards are regarded as having borne the full cost of fuel if the full amount expended on that card during the year of assessment is included in their travel allowance and is taxed as remuneration in the manner set out in 5.1.
• A maintenance cost component – this component may only be included if the recipient bears the full cost of maintenance. A recipient will be considered to bear the full cost of maintenance if the recipient takes out a maintenance plan either as a top-up or add-on plan after the acquisition of the vehicle and is responsible for the cost of that maintenance plan and all maintenance costs not covered by the maintenance plan (for example, top-up uids, tyres or maintenance required as a result of abuse of the motor vehicle). A maintenance cost component may not be claimed if the vehicle was the subject of a maintenance plan when it was acquired by the recipient as the value of the vehicle (see below) will effectively include an element for maintenance.
The three components are included in a cost scale table and the recipient must select the appropriate gures based on the value of the vehicle. The value of the vehicle generally includes VAT but excludes interest – refer Annexure B for detail. The value of the vehicle includes the cost of a maintenance plan when the vehicle is the subject of a maintenance plan, that is if the maintenance plan commences at the same time the motor vehicle is acquired by the recipient irrespective of whether the cost of the plan is separately invoiced or included in the vehicle purchase price.
The cost scale table which is applicable for the 2012/2013 year of assessment, that is, from 1 March 2012 to 28 February 2013, is included in Annexure B. The tables which are applicable to the other years of assessment (including the 2013/2014 year of assessment) are available on the SARS website (www.sars.gov.za). As these tables change periodically, taxpayers should review the effective date of the particular notice to ensure the correct costs are applied to the correct years of assessment.
As an alternative to calculating the deemed rate according to the cost scale table, the notice (see Annexure B) provides that taxpayers may choose to use a speci ed rate of R3,16 per kilometre (in the case of the 2012/2013 year of assessment)* provided –
• the business kilometres travelled in the vehicle/s used do not exceed 8 000 kilometres in total during the
particular year of assessment; and
• the recipient received no other compensation in the form of a travel allowance or reimbursement.
Example 10 – Travelling deduction where no record of actual expenses was kept
Facts:
J received a travel allowance of R36 000 for the year of assessment ending 28 February 2013. His opening odometer reading on 1 March 2012 was 17 005 kilometres and his closing odometer reading on 28 February 2013 was 48 091 kilometres. He kept an accurate logbook detailing all of his business trips, 14 115 kilometres were travelled for business purposes. No records of actual costs relating to the motor vehicle were kept. J pays all the fuel and maintenance costs. The value of his motor vehicle is R180 000 and he wishes to claim a travel deduction for the 2013 year of assessment.
96 000 39 946
Result:
Travel allowance received
The business portion of the expenses incurred in travelling on business will be determined as follows:
Opening kilometres: (01/03/2012)
Closing kilometres: (28/02/2013)
Total kilometres travelled
The xed cost for the vehicle amounting to R180 000 is R52 594.
* This rate changes periodically.
R36 000
17 005 48 091 31 086
234 saIT comPendIum oF Tax LegIsLaTIon VoLume 2