10. Reductions to the Fringe Benefit value
There are three ways in which the income value fringe benefit value can be reduced on assessment –
1. An across-the-board reduction for business travel, calculated by reducing the code 3802 fringe benefit value by the ratio of business kilometers divided by total kilometers (from the logbook).
2. If the employee pays in full for any one or more of insurance, licence fee or maintenance expenses, the total expense incurred by the employee is reduced by the ratio of private kilometers to the total kilometers to represent the private portion of the cost, and this value reduces the fringe benefit value
3. If the employee pays the full cost of fuel of the private use of the vehicle, the fringe benefit value will be reduced by a value calculated by multiplying the SARS Cost Scale table fuel rate/km by the number of private kilometers in the logbook.
Logbook
It goes without saying that if the employee wants to reduce the income value of his company car fringe benefit on assessment, a logbook must be kept.
All of the reductions listed above are dependent on either the number of business or private kilometers.
Logbooks are therefore required for company cars, travel allowances, but not for travel reimbursements if the full amount of the travel reimbursement is excluded from income (code 3703).
If a logbook is not kept, the employee will not be allowed a reduction to the value of the fringe benefit on assessment and will have to pay to SARS the tax that was not withheld in the payroll. This will result in some very unhappy employees paying the payroll office a visit.
It is not a legal requirement, but more of a moral duty to inform your employees of the consequences of not keeping a logbook.