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Tax advantages of leasing a car?

Posted 2 September 2013 under Tax Q&A


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Hi, What are the advantages of leasing a vehicle for a business, tax benefits? Can I write off the lease payments made on the vehicle as expenditure and claim back from SARS?
Thanks.

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TaxTim TaxTim says:
2 September 2013 at 23:23

What work do you do that requires a car, and are you paid a commission?

David says:
3 September 2013 at 10:57

I own property in Limpopo and the Gauteng province and I manage them so I travel between the provinces and I'm not paying myself commission.
Thanks

TaxTim TaxTim says:
3 September 2013 at 23:42

So you run the business in your personal name and work for yourself?

David says:
4 September 2013 at 9:04

The business is formally registered and yes I'm self employed.

TaxTim TaxTim says:
5 September 2013 at 0:30

There are two issues here, if you purchase a car in the name of the business and you use the car for work and business purposes then the use of the car will be deemed to be a fringe benefit in your hands and you will be taxed on this. The amount that will be included in your income, if the care is leased, will be the actual lease payments which can be exceptionally high and therefore increase your taxes owed quite a bit. Further in order to reduce this, you will need to keep a detailed logbook in order to claim any deduction against this allowance. The case becomes even more difficult if you are not paying commission either.

It may work out better for you to lease your own car and then claim the travel costs at the AA/SARS prescribed rate per km for all business mileage traveled, which includes full wear and tear. You could do a test based on the levels of income of you and the company.


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235 DAYS
LEFT OF
TAX SEASON
2017


TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund

Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

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