We have submitted an ITI Return - Commission based only . My Question would be , based on this current Audit Correspondence received from SARS they requesting the following . Kindly note that depreciation on motor vehicle should be prorated as per log boo
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
We accept that the individual is not in a receipt of an allowance. The principle however, apart from the fact that the adjustment is now made under section 23(g) (or 23(a)) of the Income Tax Act, is the same.
The current practice generally prevailing with regard to private travel is as follows:
“In this regard, section 8(1)(b)(i) 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 term “place of employment” applies when the recipient of the allowance or advance is an employee and the term “place of business” applies when the recipient is a holder of an office.
Travel between the place of employment or business and the place of residence is regarded as private travel even if the travel takes place after normal or during extended working hours.”
Code 4015 is the correct code to use, but the amount claimed must be the portion relating the travelling on business (or trade) only. In other words, the amount after the private travel element pf the total expenditure was removed. The adjustment is done on the basis of the private travel as obtained from a logbook.
The depreciation should not have been shown in 4027, but if it was, it should also have been adjusted for private use.
Based on our understanding of the issue here, no other documentation is required. We are not sure what you want to amend in the logbook.