Directors purchase 2 luxury motor vehicles on company name. But the installments are being paid off the directors loan account. SARS raises an assessment on the directors personal capacity stating understated PAYE. Can SARS do this? Can an objection be raised?
Why are the instalments going off the loan accounts as opposed to being recorded as a company expense, if they are company cars?
Sharonsays: 5 November 2015 at 21:10
I'm not sure why the directors choose to pay for the vehicles instalments from their loan accounts, when vehicle was purchased on company name. Will the use of these vehicles still be classified as a fringe benefit, since the directors did not include it in their salaries and can SARS penalise them for it?
TaxTimsays: 5 November 2015 at 21:30
Yes, the use of a company car is a taxable fringe benefit - employees who are required to travel for business purposes and make use of a company car, are subject to fringe benefit tax of 3.25% (if there is a maintenance plan in place) or 3.5% (with no maintenance plan) of the determined value of the company car.
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