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Company Car

If an employee makes use of a company-owned car, the taxable value of the vehicle must be added as a benefit to the employee’s remuneration each month.

The fringe benefit value is calculated as a percentage of the determined value of the car (as per the SARS guide here), and the percentage will depend on whether the original purchase price includes a maintenance plan. The applicable percentages are as follows:

  • Maintenance plan: 3.25% per month of the determined value
  • No maintenance plan: 3.5% per month of the determined value

The fringe benefit value is 80%, 20%, or 100% taxable, depending on the proportion of private use:

  • If the vehicle is used 80% or more for business purposes, the value of the company car benefit is 20% taxable.
  • If the vehicle is used less than 80% for business purposes (but there is some business use), the value of the company car benefit is 80% taxable.
  • If the vehicle is used 0% for business purposes (i.e., it is used only privately), the value of the company car benefit is 100% taxable.

SimplePay has a built-in item to accommodate the special tax and reporting requirements related to an employer-owned motor vehicle. This benefit will be reported under code 3802, and the taxable percentage will be reported under code 4582.

Please note: In order to have less than 100% (i.e., only 20% or 80%) of their company car benefit taxed, employees must maintain detailed records of business travel, generally in the form of a logbook. SARS may assess whether the employee has kept accurate records of the distances travelled for business purposes and determine whether less than 100% of the company car benefit will be taxed.

To add a company car to an employee’s profile:

  1. Go to Employees, and select the relevant employee.
  2. Click on Add next to Regular Inputs.
  3. Select Company Car under Benefit.
  4. Enter the determined value of the vehicle, as calculated per the SARS guide.
  5. Indicate whether the vehicle includes a maintenance plan, as this influences the percentage of the taxable value.
  6. Select the Taxable Percentage as “80%” or “20%”, based on the employee’s use of the vehicle (which can be determined based on the employee’s logbook). Alternatively, select “100% (i.e. no business use)” if the company car is used only for private purposes, and no logbook is kept.
  7. Click Save.

Multiple Company Cars

On SimplePay, it is possible to have two or more company cars added to an employee’s profile. To do so:

  1. Follow steps 1-5 as outlined above.
  2. Select the Taxable Percentage as “80%”, “20%” or “100% (i.e. no business use)”. Note that this should match the Taxable Percentage of the other company car(s) already added to the profile.
  3. Click Save.

Please note: The private use percentage must be the same for all company cars used by a particular employee. There cannot be a different percentage subject to PAYE for this benefit as it relates to the requirement of the employee to travel for business purposes.