Thank you for your prompt reply. What do you mean by car cost / 7 years and interest on your loan under finance charges? Sorry if this is a really basic thing to understand, I just want to make sure :)
TaxTimsays: 1 July 2015 at 17:37
The value of the car can be depreciated over 7 years, so you would divide the cost by 7 and show that under the Wear and Tear questions. This is because the value of the car can be assumed to be replaced after 7 years, as if you are saving for a replacement over that time.
The finance charges would include the interest paid on your borrowed money from Wesbank in order to finance the car.
Larrysays: 2 July 2015 at 21:52
Thank you. Final question on this subject - so the final wear & tear figure will be calculated as follows:
(All the interest paid on the borrowed money from Wesbank) (value of car / 7 years) = total wear & tear?
Please confirm if my understanding is correct?
TaxTimsays: 2 July 2015 at 22:34
You would take the actual value of the car - so what it was worth when you bought it, not the interest amount - the value if you had paid cash and divide that by 7. The interest is separate and goes under finance charges.
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