How does a person obtain right of use of a motor vehicle (in personal capacity)?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
An affidavit may well be appropriate, or required.
You didn’t mention the manner in which the husband obtained the right to use the vehicle. Or whether the deduction was made based on accurate data. We therefore accept, as we did in our first response, that the reduction was not done based on accurate data. We also accept that the motor vehicle was NOT “acquired by that recipient under a bona fide agreement of sale or exchange concluded by parties dealing at arm’s length”, or, “held by that recipient under a lease”.
All that then remains, is the “in any other case” referred to in annual notice where the rate per kilometre is fixed – in terms of section 8(1)(b)(ii) and (iii) of the Income Tax Act. In terms thereof, “value” in relation to a motor vehicle used by the recipient of an allowance will be “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.”
That is why we referred to “the right of use thereof” – we assumed the husband didn’t “obtained the vehicle”.