One of the most common fringe benefits encountered on modern payrolls is the right to use a company car.

Where an employee has been granted the right to use a company car, Vat on the fringe benefit is calculated as follows:

• Where the vehicle is a motor car (not a bus or kombi) and the input tax was specifically denied, the calculation is as follows:

• For any other vehicles, the calculation is:

• If the employee pays in full for the repairs or maintenance of the car, the calculated amount must be reduced by R85 per month.

Remember: The determined value of the car is the purchase price, excluding Vat and finance charges.

Example:

John is provided with a company car, by his employer. The determined value of the car is R140 000. The consideration for the deemed supply of the fringe benefit is R420 per month (R140 000 x 0.3%).

His employer must therefore account for output tax of R51.58 a month (14% of the value of the fringe benefit).

Don't become a statistic!

This requirement is commonly overlooked, and rakes in thousands of rands in fines and penalties for SARS. With the Practical Vat Loose Leaf, your payroll administrator will be aware of all the provisions relating to fringe benefits, and will tax employees correctly.

Fringe benefits include:

• The company car for the star sales exec,
• The company smartphone given to the PA, so she can keep track of every call and appointment
• The laptops and expensive business books for staff
• The long-service award for Freddie, the driver, who's been with you for 15 years
• The drinks and snacks you bought for that big client meeting last week
• The World Cup hospitality booth you're coughing up for, to thank the cream of your crop for their record-busting performance...

If you don’t declare the Vat on fringe benefits you'll pay 10% penalties

When you fail to declare the Vat on these sorts of benefits, you can expect Vat penalties of 10% of the fringe benefit amount... On a R350 000 company car, that's no small change!

We give you clear guidelines to follow on the Vat treatment of fringe benefits, so you never again lose thousands of rands in money in penalties (or unclaimed deductions!). We'll show you:

• The five exceptions to the basic rule
• The three benefits that are always subject to Vat
• How to calculate your Vat liability right, the first time
• How to calculate the fringe benefits Vat on the company car
• The tax free fringe benefits that you can claim.

All of this detailed and practical information lies waiting for you in The Practical Vat Loose Leaf.

Try our complete Vat Advisory Service risk-free for 14-days. As part of this service you'll receive the Practical Vat Loose Leaf, three Bonus Reports, Regular updates, the daily Tax Bulletin, Online access to past Vat Updates and access to the Vat Helpdesk.

What else you'll discover in the Practical Vat Loose Leaf, to help you take control of your Vat:

Checklists, to save you time and ensure you don't miss a thing!

• 5 exceptions to the basic fringe benefits rule
• 6 vehicles that SARS opens the doors to
• 4 critical facts you must know about Vat when you receive an insurance settlement
• Documents to attach to your Vat101 application
• 6 basic rules about travel and Vat

Vat advice you can put into practice today:

• 24 activities that qualify for the diesel refund scheme
• How to claim every input tax credit possible
• 3 general rules about the Vat201 return
• How to complete your Vat return
• 4 important documents to keep for export between branches