When claiming a travel allowance on the IT12, we are asked is the vehicle HP or Leased. Completed and uploaded the detailed travel log & docs to sars for audit.
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We accept, for purposes of the guidance that follows, because you refer to “claiming travel allowance on the IT12”, that you require guidance with respect to the reduction of the allowance that is done under section 8(1)(b) of the Income Tax Act. It is not clear if the taxpayer will be basing this on the basis of ‘accurate data furnished’ – see section 8(1)(b)(iii) or on the rate per kilometre determined by the Minister in the Gazette. The guidance will not be different so that doesn’t really matter.
The return of income, the ITR12, doesn’t require detail relevant to the ‘Cost Price or Cash Value’ of the vehicle and then provides space for ‘wear and tear’ or lease payments. This is because section 8(1)(b)(iii) (in (aa)) deals with a ‘vehicle that is being leased’ differently to any other vehicle (in (bb)). An ‘HP’, that you refer to, is not a lease.
SARS is entitled to request the documents relevant to the lease or acquisition of the vehicle in question, because this is, we submit, ‘relevant material’ as defined in the Tax Administration Act. The fact that SARS hasn’t requested this previously, is irrelevant. In the ITR12, the taxpayer specifically declared that he or she has “the necessary receipts and records to support all my declarations on this form which I will retain for inspection purposes”.
There has been no change in this regard at SARS either and taxpayers have in the past received similar requests.
You referred to a dispute. Please remember that SARS may, under rule 8(1) require the taxpayer to produce additional substantiating documents necessary to decide the objection. We submit that the lease agreement or purchase detail would in fact be ‘additional substantiating documents’.