I have a question regarding a small business, way too small for VAT.
They have one vehicle which is financed through Wesbank for which they pay monthly installments, over and above that the general repairs, maintenance and fuel costs.
Are the installments of the vehicle a business expense?
Is the fuel a business expense?
Are the repairs and maintenance a business expense?
Or when it comes to income tax, do they only get to use the AA rate per km to claim and none of the above?
You are able to claim the finances charges for the vehicle for the applicable tax year and you are able to claim depreciation on the vehicle at 20% per annum.
All other costs are calculated according to business kilometers traveled and these need to be documented and claimed in the form of a logbook. SARS has a logbook PDF available on their website to download. Remember to record your vehicle’s odometer reading on 1 March, i.e. on the first day of a tax year and make sure that you keep a logbook throughout the year. Without a logbook, you won’t be able to claim the cost of business travel against your travel allowance.
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!