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Company car versus personal car and travel allowance

Posted 23 February 2016 under Tax Questions



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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)?

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TaxTimTaxTim 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.


TaxTimTaxTim 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?


TaxTimTaxTim 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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