Tax relief for users of company cars

RECIPIENTS of company cars might see their take-home pay increase on a monthly basis, consultancy Ernst & Young said yesterday.

RECIPIENTS of company cars might see their take-home pay increase on a monthly basis, consultancy Ernst & Young said yesterday.

In a statement, Vedika Andhee, E&Y's director for tax, said the provision of a company car had a fringe benefit tax attached to it.

"It was announced earlier this year that the SA Revenue Service will be re-considering the value of the fringe benefit. Currently, company cars are taxed at a rate of 2,5percent of the 'determined value' of the motor vehicle," Andhee said.

The concept of "determined value" was comprehensively defined in the Income Tax Act but would generally be the original cost of the vehicle to the purchaser.

"One way of reducing the tax on a company car is to reduce the determined value of the car or to reduce the percentage points applicable to the determined value," she said. - Sapa

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