Case Scenario

Tax Implication of Company Cars in the Motor Industry

Benefits of keeping a logbook

Case Analysis

One of the benefit of the motor industry is the use of a motor

vehicle. This result in a fringe benefit where personnel is

taxed on a monthly basis based on the average Dealer Billing

Price (from 1 March 2015).

From discussions with people in the industry, the keeping of a

logbook is not common practice which could result in nega-

tive tax implications. The table below shows the different tax

implications.

Tracking systems with a logbook function is not always an option as it would require the contract to be taken over by

the buyer which may not be his/her preferred service pro-

vider. The financial costs of the logbook option is also high

compared to data loggers, both on the initial capital cost and

monthly subscription.

Manual recordkeeping is seen as a necessary evil and can take between 30 and 40 hours per year to complete.

Smaller electronic recording devices can record up to 6 weeks of data before it needs to be downloaded. This again

places a burden on users.

Most of these devices does not give the actual address of the end

destination and require user input to manually look up GPS

points on Google Maps in order to manage it.

Antennas need line-of-sight which may result in lost

distances in many cases.

Additional functionality to consider is the ability to change

between Business or Private whilst driving.

www.elogger.co.za

Elogger Solution • Plug the Elogger into the lighter socket Stow away out of sight.

• All trips will be recorded automatically Transfer Elogger to new vehicle when required

• Download data once a year for tax purposes On-site download service available for more the 5 users

• Elogger data in Excel format Date, time, distance, actual end destination

September 2015

Dealer Billing Price R 350 000

Monthly Annual

Fringe Benefit @ 3.5% R 12 250 R 147 000

R 9 800 R 117 600

Taxation @ 35% R 3 430 R 41 160

Logbook records kept

Tax Return No Logbook

Business Travel

20%

Business Travel

50%

Business Travel

80%

Fringe Benefit @ 3.5% R 147 000 R 147 000 R 147 000 R 147 000

Business Travel deduction R 0 -R 29 400 -R 73 500 -R 117 600

Taxable Income R 147 000 R 117 600 R 73 500 R 29 400

Taxation @ 35% (illustration) R 51 450 R 41 160 R 25 725 R 10 290

Deducted via payroll -R 41 160 -R 41 160 -R 41 160 -R 41 160

Tax Due/(Refund) R 10 290 R 0 -R 15 435 -R 30 870

Taxed Monthly Fringe Benefit @ 80%

National Distributor Asset Management Solutions

Wessel Roux

sales@elogger.co.za

www.elogger.co.za

Tax Implication (based on 2015/16 tables)

Interpretation The financial benefit of keeping a logbook is clearly demonstrated in the tables

above. Taking into account that travel between “Home” and “Office” is

classified as Private, the taxpayer will still travel on average 50% for Business.

This will result in a tax refund of R15 435 on the tax return..

Many taxpayers are used to the monthly deduction of 80% of the fringe benefit

and does not necessarily see the value of keeping a logbook in the tax return as

the negative impact forms part of the tax due/refund.