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Company car versus personal car and travel allowance

Posted 23 February 2016 under Tax Q&A


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Graham says:
19 February 2016 at 9:22

A client of mine is the sole shareholder and employee of his company. He does a lot of car travel for his work.
What is the most beneficial method in terms of tax:
to buy a car in his own name, or to buy one in the company name and use it for business and personal (will be small personal use)?

This entry was posted in Tax Q&A and tagged , , , , , , , . Bookmark the permalink.

TaxTim TaxTim says:
19 February 2016 at 17:58

How much mileage will he be doing each year for work purposes?

Graham says:
22 February 2016 at 9:09

His work takes him to a lot of rural areas.
if I were to guess - over 15,000 kms comfortably and well over 80% will be business use.

TaxTim TaxTim says:
23 February 2016 at 12:48

Then it would make sense for the company to buy it and he would receive the use of the car, but be taxed at 20% of that value. The company gets to write off the car for depreciation purposes.

Graham says:
23 February 2016 at 13:42

Under this arrangement can he claim a travel allowance?

TaxTim TaxTim says:
23 February 2016 at 23:09

He would need to keep a logbook and still submit this to SARS so some of his car allowance would be refunded when he submits his tax return.


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