Should we provide the purchase agreement for the Toyota even though it was acquired by the trust? Should we explain the whole scenario with the Jaguar and Toyota? I understand that the HelpLine is not intended to provide advice on responding to SARS, howe
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
SARS is entitled to request the purchase agreement relevant to the acquisition of the vehicle in question, because this is, we submit, ‘relevant material’ as defined in the Tax Administration Act. 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”.
We accept, for purposes of the guidance that follows, because you refer to “a travel claim” 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 based 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, require detail relevant to the ‘Cost Price or Cash Value’ of the vehicle and then provides space for ‘wear and tear’. This should only be completed if the vehicle was not leased by the taxpayer. This is because section 8(1)(b)(iii) (in (aa)) deals with a ‘vehicle that is being leased’ and with any other vehicle (in (bb)).
The taxpayer would, in this instance, have had to provide the lease payments.