I pay R3700 as a car repayment for one of my employees. Is this full payment part of his salary, or should I only allocate a portion? It seems unfair that he takes the entire amount into his salary and therefore incurs a higher PAYE, when the car remains my property.
The law is that he will have the value of the car multiplied by 3.25% included in his return as a fringe benefit - you then take 80% of that total amount and include it in his return. You own the car, but the taxpayer/employee will be the one using the vehicle so needs to be taxed because he gets the benefit. If he keeps a logbook then when he submits his tax return to SARS he will be allowed the business mileage traveled as a deduction.
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