How to Make the Most of Your Travel Claims

Do you know what travel expenses you can and cannot claim?
Do you know when or when not to use a logbook?
Find out how to make the most of your travel expenses.

Save R23 863.20 by keeping an accurate logbook.

Maintaining an accurate logbook is a tedious affair but the benefit of additional tax savings may make it worthwhile.

An accurate logbook enables you to base your claim for travel expenses attributable to business and private use on the actual distances travelled. You may also be in a position to reduce the taxable benefit of the company vehicle used by you. Not having a logbook means you are at the mercy of the provisions of the Tax Act, that can in some cases be extremely costly.

Our practical example, from The Practical Tax Loose Leaf, shows you how you can easily save R23 863.20 by keeping an accurate logbook.

Who can benefit from an accurate logbook?

• Sole proprietors, commission earners
• Employees who receive travel allowances
• Employees, directors, members, etc. using a company owned vehicle

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Example
Vincent, a commission earner, can claim his car expenses as a deduction from business income.

The cost price of the car was R300 000.

Total expenses for the year were:

But Vincent can't deduct the total cost incurred. He must first consider how much he used his car for private travel and then make an adjustment accordingly.

Because he doesn't have exact figures, he must make this adjustment in two ways...

•     If he didn't keep an accurate log book, his private use of the car would include the first 18 000kms (limited to 32 000km) for the year.

So, his deduction is limited to:

Total expenses      =    R113 018
Deemed business use of the car     =    R113 018/32 000km x 14 000km
Allowable deduction           =    R46 702.18

•     If Vincent kept an accurate log book, he'd know from a summary of the information he'd diligently recorded that...

Private km     =    10 983km
Business km     =    20 276km
Total distance     =    31 259 km  
                    
In this case, his allowable deduction would be:
Total expenses     =    R113 018
Deemed business use of the car      =    R113 018/31 259km x 20 276km
Allowable deduction       =    R73 308.58
    
That means that an ACCURATE LOGBOOK would increase Vincent's tax deduction by R26 606.40!

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What you’ll discover in the Practical Tax Loose Leaf:

• Company car vs travel allowance: different scenarios, very different outcomes
• How to turn your company car into a tax saver
• Depreciation: How to achieve the highest possible tax savings with depreciation
• How to gear up for the hike in tax on your travel allowances in 2010
• Expenses: How to obtain the approval of all entertainment expenses as business expenses
• Directors’ tax and PAYE: All the best tax savings tips
• The best tax avoidance methods for estate planning
• Corporate and Personal Tax: How to balance corporate and personal tax burdens in the most tax efficient way
• Information on tax tables, banking, exchange controls, insurance, invoicing, immovable property, taxation of foreign operations and much more…

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