Company Cars - For Business or Pleasure
The fringe benefit of using a company provided vehicle is recorded under codes 3802 (not on operating lease) and 3816 (on operating lease). Statistics for code 3816 is not available from SARS and is shown under Other. The number of taxpayers using company provided vehicles under code 3802 has decreased by 25% to 77 000 in the 2016/17 tax year. The last two years have seen most of this decrease and could be due to the depreciation period for vehicles acquired pre-2010 ending.
The business portion deduction under code 4048 for vehicles are not available but we have made some analytical assumptions. It is also our opinion that most of the taxpayers in this fringe benefit section are from the motor industry. From informal surveys we did in this market segment, we have found that most say they have some system in place for logbooks although we couldn’t find any examples thereof.
The applicable SARS codes for company vehicles are:
- 3802 – Use of a Motor Vehicle acquired by Employer Not under an Operating Lease (3.5% of vehicle value)
- 3816 – Use of a Motor Vehicle acquired by Employer via Operating Lease (3.25% of vehicle value)
- 4048 – Deduction for Business portion of code 3802
- 4050 – Deduction for Business portion of code 3816
SARS Logbook Requirements
The minimum required logbook information:
Date of travel
Business travel details (where to and reason for the trip)
Opening and Closing Odometer
Taxpayers have the option to record their travel manually and complete the sample logbook format from SARS
SARS 10 Year Statistics
Below is an extract of the applicable codes from the 2017 Tax Statistics – Personal Income Tax 10 year.
Only the statistics for vehicles not on operating lease is reported. The average value of the fringe benefit is R78 000 in 2016/17, up by 85% from the 2010/11 tax year. The biggest increase was in 2012/13 which we believe can be contributed to the increase in compliance in the motor industry as well as the phasing out of older vehicles purchased before the law changes in March 2010.
The average value of a company vehicle increased accordingly and is currently at R185 000 in 2016/17. This value seems understated given the fact that many motor industry employees fall in this bracket and the average value of the vehicles on the floor at a dealership is well over this level.
Analytics 10 Year Statistics
Although there is no definite way to establish logbook compliance in this section, we estimate at least 70 000 taxpayers do not claim the business portion deduction. This is partly due to company vehicles are often allocated to directors and managers which do not travel for business often. The estimated manual logbooks in this portion is fairly low at 20% as most vehicles in this category may be fitted with tracking systems. We also believe that many taxpayers are not aware that they should keep a logbook and reduce their taxable fringe benefit.