Travel Allowances - 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 Lease 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, is entitled to claim his actual motor vehicle expenses as a deduction from business income received. The cost price of the vehicle used was R300 000. The total motor vehicle expenses for the year are the following:

Motor vehicle expenses

Vincent is not, however, entitled to deduct the total cost incurred. An adjustment must be made for costs attributable to the private use of his motor vehicle. The quantum of this adjustment can be determined in two ways:

1. Where accurate records of private and business distances travelled were not kept:

   Private usage is deemed to be equivalent to the first 18 000km’s (limited to 32 000km for the year). The allowable deduction is thus limited to: Total expenses R113 018 Deemed business use of vehicle 113 018/32 000km x 14 000km Allowable deduction R49 445.38
    

2. Where accurate records of private and business distances travelled were kept:

   Private usage is calculated on the actual business distances travelled in relation to the total mileage. Summary of information recorded in an accurate logbook

Allowable deduction where an accurate logbook is kept

Total expenses R113 018

Deemed business use of vehicle 113 018/31 259km x 20 276km Allowable deduction R73 308.58 an ACCURATE LOGBOOK would increase Vincent’s tax deduction by R23 863.20.

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What you’ll discover in the Practical Tax Loose Leaf. Order today!

• 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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