Binding private rulings – Who bore the full cost of the fuel?

dividends 3By Webber Wentzel

Who bore the full cost of the fuel?

Generally speaking, where a person uses his or her private vehicle to conduct business and receives an allowance or grant in respect of such usage, a deduction against the allowance may be made on assessment for normal tax.

Various methods are used in order to determine the allowable deduction, but where the recipient makes use of the “deemed rate per kilometre” method, this must be done in accordance with the manner prescribed by the Minister of Finance in the notice issued in the Government Gazette.

According to the notice, in order for the user of the vehicle to claim the fuel cost, the recipient of the allowance must have “borne the full cost of the fuel used in the vehicle”. There was uncertainty as to whether or not the recipient of the allowance or garage card had in fact borne the full cost of the fuel used in the vehicle.

Finding by SARS

Recipients will be regarded as having “borne the full cost of the fuel” if the full amount expended on that garage card during the year of assessment is included in the recipient’s travel allowance and is taxed as remuneration. In these circumstances, a recipient will be entitled to claim the “fuel cost” element as a deduction against the travel allowance.

This ruling applies with effect from 1 April 2014 for an indefinite period.