Page 247 - SAIT Compendium 2016 Volume2

IN 14 (3)
Income Tax acT: InTeRPReTaTIon noTes IN 14 (3)
(iv) where any motor vehicle which is owned or leased by an employee, his spouse or his child, whether directly or indirectly by virtue of an interest in a company or trust or otherwise, has been let to the employer or any associated institution in relation to the employer, the sum of the rental paid by the employer or associated institution and any expenditure defrayed by the employer or associated institution in respect of the vehicle, shall be deemed to be an allowance paid to the employee in respect of transport expenses, and in such case the said rental shall for the purposes of this Act (excluding this paragraph) be deemed not to have been received by or to have accrued to the lessor of such motor vehicle, and for the purposes of paragraph 2 (b) of the Seventh Schedule such employee shall be deemed not to have been granted the right to use such motor vehicle.
(c) A recipient shall, for the purposes of paragraph (a) (i) (bb), be deemed to have actually expended,—
(i) where that recipient proves to the Commissioner the amount of the expenses incurred by him or her in respect of accommodation, meals or other incidental costs (other than any amount of expenditure borne by the employer otherwise than by way of payment or granting of the allowance), the amount so actually incurred but limited to the amount of the allowance or advance paid or granted to meet those expenses; or
(ii) for each day or part of a day in the period during which that recipient is absent from his or her usual place of residence, such amount in respect of meals and other incidental costs, or incidental costs only, as the Commissioner may determine for a country or region for the relevant year of assessment by way of notice in the Gazette, but limited to the amount of the allowance paid or granted to meet those
expenses: Provided that this subparagraph does not apply to the extent that—
(aa) the employer has borne the expenses (otherwise than by way of granting the allowance or advance) in respect
of which the allowance was paid or granted for that day or part of that day; or
(bb) the recipient has proved to the Commissioner any amount of actual expenditure in respect of meals or
incidental costs for that day or part of that day, as contemplated in subparagraph (i).
De nition of ‘remuneration’ in paragraph 1 of the Fourth Schedule
Annexure B – Table of rate per kilometre
1. De nition
In this Schedule, ‘value’ in relation to a motor vehicle used by the recipient of an allowance as contemplated in section 8 (1) (b) (ii) and (iii) of the Income Tax Act, 1962, means—
(a) where that motor vehicle (not being a motor vehicle in respect of which paragraph (b) (ii) of this de nition applies)
was acquired by that recipient under a bona de agreement of sale or exchange concluded by parties dealing at arm’s length, the original cost thereof to him/her, including any sales tax or value-added tax but excluding any nance charge or interest payable by him/her in respect of the acquisition thereof;
(b) where that motor vehicle—
(i) is held by that recipient under a lease contemplated in paragraph (b) of the de nition of ‘instalment credit
agreement’ in section 1 of the Value-Added Tax Act, 1991; or
(ii) was held by him/her under such a lease and the ownership thereof was acquired by him/her on the termination
of the lease,
the cash value thereof as contemplated in the de nition of “cash value” in section 1 of the Value-Added Tax Act; or
(c) in any other case, the market value of that motor vehicle at the time when that recipient rst obtained the vehicle
or the right of use thereof, plus an amount equal to the sales tax or value added tax which would have been payable in respect of the purchase of the vehicle had it been purchased by the recipient at that time at a price equal to that market value.
2. Determination of rate per kilometre
The rate per kilometre referred to in section 8 (1) (b) (ii) and (iii) must, subject to the provisions of paragraph 4, be determined in accordance with the cost scale set out in paragraph 3, and must be the sum of—
(a) the xed cost divided by the total distance in kilometres (for both private and business purposes) shown to have been
travelled in the vehicle during the year of assessment: Provided that, where the vehicle has been used for business
11. General deductions allowed in determination of taxable income.—For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall be allowed as deductions from the income of such person so derived—
(a) expenditure and losses actually incurred in the production of the income, provided such expenditure and
losses are not of a capital nature;
‘remuneration’ means any amount of income which is paid or is payable to any person by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance, retiring allowance or stipend, whether in cash or otherwise and whether or not in respect of services rendered, including—
(cA) 80 per cent of the amount of any allowance or advance in respect of transport expenses referred to in section 8 (1) (b), other than any such allowance or advance contemplated in section 8 (1) (b) (iii) which is based on the actual distance travelled by the recipient, and which is calculated at a rate per kilometre which does not exceed the appropriate rate per kilometre xed by the Minister of Finance under section 8 (1) (b) (iii): Provided that where the employer is satis ed that at least 80 per cent of the use of the motor vehicle for a year of assessment will be for business purposes, then only 20 per cent of the amount of such allowance or advance must be included;
saIT comPendIum oF Tax LegIsLaTIon VoLume 2 239