Do you know what travel expenses you can and cannot claim? Do you know when or when not to use a logbook? Find out how to make the most of your travel expenses.
Save R 26 606.40 by keeping an accurate logbook
Maintaining an accurate logbook is a tedious affair but the benefit of additional tax savings may make it worthwhile.
An accurate logbook means you can base your claim for travel expenses for business and private use on the actual distances travelled. You may also be able to reduce the taxable benefit of the company vehicle used by you. No logbook puts you at the mercy of the provisions of the Income Tax Act, that can in some cases be extremely costly.
In fact, since 1 March 2010, if you’re using the gazette rates per kilometer method for calculating your travel claims, then no logbook means no claim!
Our practical example below shows you how you can easily save R 26 606.40 by keeping an accurate logbook.
Who can benefit from an accurate logbook?
• Sole proprietors, commission earners
• Employees who receive travel allowances
• Employees, directors, members, etc. using a company owned vehicle
Example
Vincent, a commission earner, is entitled to claim his actual motor vehicle expenses as a deduction from business income received. The cost price of the vehicle used was R300 000. The total motor vehicle expenses for the year are the following:
Motor vehicle expenses
Fuel and oil R9 554
Insurance R9 780
Maintenance R3 564
Licence R120
Lease payments R90 000
Total R113 018
Vincent is not, however, entitled to deduct the total cost incurred. An adjustment must be made for costs attributable to the private use of his motor vehicle. The quantum of this adjustment can be determined in two ways:
1. Where accurate records of private and business distances travelled were not kept:
Private usage is determined in the same way that the private use of a company car is determined where no travel allowance is received. Assuming that Vincent carries the full costs of the running the vehicle the private use of the vehicle is calculated as follows:
R 300 000 x 100/114 = R 263 158 (VAT to be excluded)
(R 263 158 x 2.1%) x 12 = R 66 315.82
Total expenses R113 018
Business use of vehicle
R 113 018 – R 66 315.82 = R 46 702.18
Allowable deduction R 46 702.18
2. Where accurate records of private and business distances travelled were kept:
Private usage is calculated on the actual business distances travelled in relation to the total mileage.
Summary of information recorded in an accurate logbook
Private km 10 983 km
Business km 20 276 km
Total distance 31 259 km
Allowable deduction where an accurate logbook is kept
Total expenses R113 018
Deemed business use of vehicle
113 018/31 259km x 20 276km
Allowable deduction R73 308.58
An ACCURATE LOGBOOK would increase Vincent’s tax deduction by R26 606.40!
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