The basis for any travel claim is the travel logbook - no claims will be allowed unless it is supported by a detailed travel logbook, containing at the following information for each trip:
|Date||Date of trip made|
|Opening km’s||Opening km's beginning of trip –|
|Closing km’s||Closing km's at end of the trip|
|Total business km’s||Closing km’s less opening km’s – you only need to show business km’s|
|Total private km’s||Optional to show private kilometers|
|From – start point||Where the trip started; the suburb where you started your journey|
|To – destination(s)||Suburbs that you visited indicating suburb(s) – split into individual trips if necessary for a particular day.|
|Reason||MUST COMPLETE - Reason for the trip, e.g. sales visit, delivery, meeting etc.|
We will also need
- A purchase agreement for your car, indicating at least purchase price and date of purchase.
Travel claims can be made against:
A. A travel allowance (a fringe benefit paid to you for the use of your car for business purposes).
B. Fringe benefit value of the use of a company car - you will deduct the business person of the taxes paid.
C. Commission earners and business owners claiming against business use of their private cars, where no travel allowance is paid.
Each of these scenarios will influence the way the claim is made and also what information is required.
YOU MUST PROVIDE A TRAVEL LOGBOOK!
A few important notes:
- You are allocated a certain monthly amount to travel using your private vehicle for business purposes. You get taxed on this amount as part of your salary, as it is seen as a fringe benefit. In order to claim against the taxes paid on your travel allowance, you will need to prove that you used your car for business purposes by providing a travel logbook (see above and download a travel logbook from here or here).
- Your travel allowance will reflect under code 3701 on your payslip and IRP5 certificate.
- You will only be taxed on 80% (or 20%) of the fringe benefit value of your travel allowance as PAYE, depending if you are using you car more or less than 80% for business travel. If you overpaid PAYE on the fringe benefit value (i.e. you traveled more than 20% (or 80%) on business, the difference will reflect as a refund when your tax return is submitted. Conversely, if you used your car less than the PAYE deducted percentage, you will have to pay additional tax on the underestimated amount.
- The deemed cost method is preferred when calculating your claim against your travel allowance, as it almost always yields the best results with considerably less administration effort (for us and you). The actual business kilometers traveled is reimbursed based on a SARS tables, containing 3 components, based on the value of your car:
- Fuel cost - amount per business kilometer (based on vehicle price)
- Maintenance cost - amount per business kilometer (based on vehicle price).
- Fixed cost as per SARS table and the value of your car, apportioned between business and private travel.
USE OF COMPANY CAR FRINGE BENEFIT
- If you have the use of a company car, SARS sees it as a fringe benefit, and you are taxed on it. It will reflect under code 3802 on your IRP5 and payslip.
- The value of the fringe benefit to you will be calculated by your companies payroll department (effectively 3.25% or 3.5% p.a. of the cost of the vehicle, with or without a maintenance plan respectively).
- PAYE tax is deducted at a rate of 80% (or 20%) of the calculated fringe benefit value of the car, depending if it is used more or less than 80% for business purposes.
- Your claim against fringe benefit taxed paid on the company car is apportioned between business and personal use, with your travel logbook as the proof of business travel. Simply put if half (50%) of your travel was business related, you will be able to claim 50% of the PAYE tax on that (less of course the portion by which your PAYE was reduced).
TRAVEL CLAIMS INDEPENDENT CONTRACTORS, COMMISSION EARNERS, SOLE PROPRIETORS AND BUSINESS OWNERS
- If you are an independent contractor or commission earner you cannot claimed deemed travel expenses as you would where a travel allowance was received. Only actual costs are permitted as travel expense deductions nad these actual costs would be apportioned between business and private use according to your logbook.
- If your total vehicle related expenses are R50,000 for the year and your traveled 50% of the total kilometers on business, you are allowed to claim R25,000 as a business expenses. This will then be decuted from your taxable income (i.e. the actual amount of the refund/tax deduction would likely be equal to R25,000 x your tax bracket, e.g. 18% tax bracket = R4,500 tax reduction/refund).
- Allowable actual expense claims include:
- For financed vehicles you are allowed to claim finance interest and finance charges.
- Wear-and-tear can be claimed for vehicles purchased less than 5 years ago (the depreciation is calculated at 20% of the cost price p.a.).
- Fuel and oil costs.
- Maintenance costs.
- Vehicle insurance costs.
- Vehicle license fees.