A taxpayer operates as a sole proprietor. The motor vehicle that she uses primarily for business purposes is in her husband’s name but she is the deemed driver of the vehicle. A log book is kept and all her expenses are apportioned between business and private. Is the taxpayer allowed to claim wear & tear on the motor vehicle even though it is not in her name and can she claim motor vehicle expenses?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The individual must base the amount of the deduction on actual costs (section 11(a), (d), (e) and 24J) actually incurred and make an adjustment in terms of section 23(g) for the private use element. The adjustment, under section 23(a) or 23(g), in respect of non-trade related travel, such as private travel, must made and must be based on a log book (which was done). With regard to the car owned by the taxpayer’s spouse, section 11(e) requires that the asset must be “owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an … “instalment credit agreement” in section 1 of the Value-Added Tax Act …” The taxpayer, in this instance and based on the facts provide, doesn’t own the car – it is probably owned by the spouse.