Can husband claim vehicle registered on wife’s name against travel allowance received from employer?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Whilst not a tax related issue we understand that the owner of vehicle will not necessarily be the title holder (it is title holder of a new, pre-owned, built or rebuilt motor vehicle, who must register it). So, for instance, if the vehicle is financed, the title holder will be the financing institution.
Section 8(1) also doesn’t have the ownership requirement as does for instance section 11(e) of the Income Tax Act. When the calculation is based on actual cost (accurate data) in respect of a vehicle that is being leased, ownership or title will not be in the name of the recipient.
In any other case (i.e. not leased) the wear and tear of that vehicle must be determined over a period of seven years from the date of original acquisition by that recipient. That would be the husband in your case.
If the recipient doesn’t furnish an acceptable calculation based on accurate data and applies the rate per kilometre (determined by the Minister of Finance by notice in the Gazette for the category of vehicle used, the notice also requires that the motor vehicle (not being a motor vehicle leased) was acquired by that recipient under a bona fide agreement of sale or exchange. It therefore requires that the vehicle must have been acquired by the recipient of the allowance before the deductions will be allowed. Where the vehicle is leased, it refers to the cash value thereof.
In any other case, the value will be the market value of that motor vehicle at the time when that recipient first obtained the vehicle or the right of use thereof, plus an amount equal to value added tax which would have been payable in respect of the purchase of the vehicle had it been purchased by the recipient at that time at a price equal to that market value. The requirement is then that the husband must have obtained the right of use thereof.