Results 1 to 6 of 6

Thread: Company car vs travel allowance

  1. #1
    Silver Member
    Join Date
    Apr 2011
    Location
    Jhb
    Posts
    276
    Thanks
    105
    Thanked 14 Times in 10 Posts

    Company car vs travel allowance

    Hi,

    I have wondered about this more than once and maybe there is someone that can help me on this one.

    Is it more beneficial to the employer to buy a company car for an employee's use or to pay the employee a travel allowance for using his own car?

    Is it better for the employee to have the use of a company car or to receive a travel allowance?

    Any thoughts? Thanks!

  2. #2
    Diamond Member tec0's Avatar
    Join Date
    Jun 2009
    Location
    South Africa
    Posts
    4,270
    Thanks
    1,656
    Thanked 439 Times in 386 Posts
    Blog Entries
    3
    Benefits for the employer. (if employer gives the company car)

    It is better for the employer to give the employee a company car. The employer can fit the car out with a tracking system that will monitor use and report abuse so your property will be protected. Thus you the employer know that the car is safe, serviced and able to handle the roads.

    So as the employer you know:

    • Car is Safe
    • Car is able to function properly
    • Employee does not abuse the car.


    Benefits for the employee.

    The employee has a safe vehicle and knows it is being tracked so she/he will not abuse it. Secondly they know that they have road side assistance if they need it “some tracking companies include this in there bundle” Also they know the vehicle is insured if there is any accident.

    So as an employee you know

    • The car is safe
    • The car is being serviced
    • The car is being tracked
    • There is road side assistance
    • Job security if the car breakdown



    Employer problems with travel allowance.

    Firstly they have no control over the car's service records, fuel consumption and safety during working hours. They have no control over insurance and or if the vehicle is reliable or not. Secondly there is a question of road side assistance.

    So as the employer you don't know:

    • Is the vehicle Safe /serviced?
    • Is the vehicle able to function properly?
    • Does the employee abuse the car after hours?
    • IS THE car insured?


    Benefits if any for the employee?

    The employee must maintain the car on set allowance and may not have enough if something expensive breaks thus there is a constant worry if the employee will be on time, Is the car safe during working hours? How much will the insurance be and will the allowance cover it?
    What if the car breaks down constantly and becomes too expensive...

    So as the employee you don't know:

    • If the allowance will cover all running cost
    • How a prolonged breakdown will effect job security?
    • Will the allowance be enough to cover insurance?
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

  3. #3
    Platinum Member sterne.law@gmail.com's Avatar
    Join Date
    Oct 2009
    Location
    Durban
    Posts
    1,328
    Thanks
    38
    Thanked 561 Times in 410 Posts
    Blog Entries
    7
    You can have a car policy linked to travel/car allowances.
    For instance the car must be serviced, may not be over xyz sms etc.
    In this way the employer retains some control on reliability and appearance.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

  4. Thanks given for this post:

    tec0 (06-Feb-14)

  5. #4
    Diamond Member tec0's Avatar
    Join Date
    Jun 2009
    Location
    South Africa
    Posts
    4,270
    Thanks
    1,656
    Thanked 439 Times in 386 Posts
    Blog Entries
    3
    Quote Originally Posted by sterne.law@gmail.com View Post
    You can have a car policy linked to travel/car allowances.
    For instance the car must be serviced, may not be over xyz sms etc.
    In this way the employer retains some control on reliability and appearance.
    That's true but you still have to deal with the fact that you as the employer have no control over the vehicle after hours. Sometimes people just don't take care of there stuff and in the end you have an employee that might be late or worse the next day. Where as a company car you have the ability to track and control movement.

    But It is true there is no right or wrong answer here so I think it comes down to the type of work the type of vehicle needed and what expectations needs and wants must be looked at.
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

  6. #5
    Silver Member
    Join Date
    May 2010
    Location
    durban
    Posts
    413
    Thanks
    121
    Thanked 61 Times in 52 Posts
    i think the questionnaire is also looking at it from a taxable point of view. what are employer benefits? employee benefits?

  7. #6
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,981
    Thanks
    3,056
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Quote Originally Posted by flaker View Post
    i think the questionnaire is also looking at it from a taxable point of view. what are employer benefits? employee benefits?
    Assuming the travel allowance is covering all the costs adequately, total mileage is not exceptionally high, and private travel is much lower than business travel, the big break for the employee which the employer doesn't get is the employee doesn't have to deal with recoupments when selling the vehicle.
    The trouble with opportunity is it normally comes dressed up as work.

Similar Threads

  1. Replies: 10
    Last Post: 18-Aug-16, 08:58 AM
  2. Replies: 2
    Last Post: 19-Jun-13, 11:42 AM
  3. Replies: 4
    Last Post: 19-Nov-12, 03:36 PM
  4. Travel allowance and commission
    By QRS in forum Tax Forum
    Replies: 3
    Last Post: 18-Jun-12, 03:01 PM
  5. travel allowance
    By raf in forum Tax Forum
    Replies: 7
    Last Post: 23-Jan-08, 08:04 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •