A company has added the use of motor vehicle as additional income under code 3802 in one of their employee’s individual tax returns. Kindly advise whether the travelling allowances/kilometres can still be claimed back, because it seems that even if travelling is claimed the client will still have to pay in.
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Code 3802, according to the relevant SARS guide (for 2020) is to be used for the benefit resulting from the “use of motor vehicle acquired by employer NOT via operating lease” by an employee. Paragraph 7(7) and paragraph 7(8) of the Seventh Schedule to the Income Tax Act prescribes how the taxable benefit, as shown on the IRP 5, can be reduced on assessment. We suspect that the client in your case did some business travel during the year and it is then only paragraph 7(7) of the Seventh Schedule that will be relevant. In the questions in the wizard, where the return is requested, you indicate that a ‘deduction’ is to be made against the taxable benefit and then, capture the detail from the log book in the relevant part of the return that then opened.