SARS adjusted the cost price of one of our client's vehicles, he is not in agreement.
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The Income Tax Act, in section 8(1)(b)(iiiA), refers to the ‘cost of the vehicle’, but then doesn’t define that further. The interpretation note on allowances also doesn’t give any guidance in this respect. Interpretation Note 72, however, states the following:
“The original cost includes the cost of add-on items, for example, tow bars, media players, air conditioners, smash-and-grab window tinting and security alarms. The original cost does not include the cost of insurance products such as the monthly service fee for vehicle tracking or roadside assistance.”
We agree with your view that accessories should be included, but that finance charges should not.