Our client travels directly from home to his clients, would this be regarded as private or business?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We are not sure if the fact that “SARS … rejected the claim stating that it is still regarded as private” travel was given as a ground for the additional assessment or a response to a request for reasons or response to an objection.
It appears form the information that the taxpayer is not in receipt of an allowance and the deduction must be based on the actual cost, which would include expenditure on fuel, insurance, finance, maintenance and wear and tear (in other words, under section 11(a), 11(e), 11(d) and 24J where applicable). The total must then be adjusted for private use (based on the logbook) – under section 23(a) or (g).
The current practice generally prevailing with regard to private travel is as follows (albeit under section 8(1)(b)(i), but relevant to this case as well) provides “that travelling between a recipient’s place of residence and place of employment or business is private travel. The location of a recipient’s place of employment or place of business is a factual enquiry. In relation to an employee’s place of employment, it is the place at which the employee must render services as agreed with the employer.”
The issue is therefore whether the home office (or place of residence) is his place of trade (or employment, if he is employed). This is a factual inquiry. SARS provides as an example, the instance where “a computer programmer, who is allowed to work from home on a permanent basis (that is, the home office is the place of employment) travels to a client’s premises to discuss system requirements and functionality, the travel from the home office to the clients’ premises.” A further example provided by SARS is where “an assistant who is employed to work as a shop assistant at a V&A Waterfront store in Cape Town for two days a week and the Canal Walk Store in Cape Town for three days a week … travels from home to a store, the travel between home and the Canal Walk Store, or the V&A Waterfront store as appropriate.”