Betty Bookkeeper explains tax implications for a company car – January 2015

Hi Betty 

An employee gets a company car and a garage card (for business travel), but no travel allowance. The car is only used by this one specific employee – travelling from home to work, and client sites.

What will the tax implication be?

Thanks and regards,


Hi Martha

The monthly tax value of the use of the motor vehicle will be 3.5% (3.25% if the vehicle is subject to a maintenance plan for at least 3 years and/or 60,000 km) of the determined value of the vehicle (cost including VAT but excluding finance charges and interest).

For PAYE purposes, only 80% of the tax value must be included in remuneration (or 20% if the employer is satisfied that at least 80% of the use of the vehicle for the tax year will be for business purposes.)

On assessment, the full amount of the tax value will be included in the employee’s gross income. The employee must keep a log book of all business and private travel and may claim a deduction equal to:

The tax value of the fringe benefit
Business km per log book/Total km per logbook

Furthermore, if the employee bears the full cost of fuel for private use of the vehicle, then the fringe benefit is reduced by the rate for fuel which would apply for an equivalent costing vehicle per the vehicle deemed cost tables provided annually by SARS, multiplied by the private km travelled per the employee’s logbook.

Hope that helps!


Don’t forget that I’m here to answer your questions about the ICBA, or just queries about your accounting at work. All you have to do is email me!