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Tax Deduction for Personal Vehicle

Posted 24 November 2015 under Tax Questions



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Paul says:
21 November 2015 at 16:52

I am busy completing my Tax tax return with TaxTim, under the Tax Deduction section there is a wear and tear section. Can I depreciate the value of my personal car if I am still paying it off?

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TaxTimTaxTim says:
22 November 2015 at 20:19

Do you use your car for work purposes other than getting to the office and back?


Paul says:
23 November 2015 at 13:04

Thanks for the quick reply.

For additional context:

I use my personal vehicle to travel to client meetings regularly. During the 2015 tax period I received a Petrol allowance of R1500 and a Vehicle allowance of R1400, both per month - I had this structured into my packaged when I joined. These values were included on my IRP5 and I paid the necessary tax.

How do I find out if I can depreciate my personal car on my tax return, I am still paying it off? I don't want to add it and then I get penalised by SARS for incorrect claim?

I have also completed the Travel Claim against allowance section on SARS eFiling with my car Value (cost price), business and personal mileage. Does this change anything?


TaxTimTaxTim says:
23 November 2015 at 17:25

There are two methods which include the depreciation on the car for work travel. Please make use of our Travel Allowance calculator to see which method will work best, but by completing this section you are essentially depreciating your car.


Paul says:
23 November 2015 at 18:10

The calculator gives me this following breakdown:

--------------------

1. Total deduction using Deemed Costs method:
From SARS table: Fixed cost 66530, Fuel cost 112, Maintenance 38.1
Fixed cost = 66530 * (365 / 365)
Fixed cost per km = 66530 / 12720 km 112 38.1
Deduction = R 6.73 x 8580 km = R 57,754.95

Since you did not record your vehicle-related costs, you must use the Deemed Costs method.
Please note the calculated deductions above are capped at your actual travel allowance amount.

Depreciated value according to your Wear and Tear calculator was: Deductible amount for 2015: R31141.6 (5 year write-off)

--------------------

Now I'm a little confused, sorry :/

Do I skip the Deemed Cost method and rather use the depreciation method?


TaxTimTaxTim says:
24 November 2015 at 0:38

If you received a travel allowance you cannot claim the normal 5 year depreciation, but the value would be depreciated over 7 years. However you need to complete the travel allowance section and not the depreciation section of your tax return. Use the deemed method, it will get you a full deduction of the amount next to source code 3701 on your tax return.


Paul says:
24 November 2015 at 11:57

Thanks, makes sense now.


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