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.
Get SARS Tax Deadlines in your Inbox
We'll tell you when you need to file, along with tax tips and updates.