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Thread: Correct method to record vehicle expenses for a Sole Prop?

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    Full Member Intothedeepbluesea's Avatar
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    Correct method to record vehicle expenses for a Sole Prop?

    Apparently if a sole prop has a vehicle that is used for business and personal use then there are 2 ways to claim a tax deduction, keep a log book of business travel or keep a record of all vehicle expenses incl repairs and petrol and then claim the percentage back that was business use. The first option of the logbook is the only one I thought was possible, rather laborious though, would much prefer the other option as I already keep a record of all the expenses, is that option allowed by SARS and what records are actually expected?

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    Site Caretaker Dave A's Avatar
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    May I point out that in order to establish the % between business and private use, you're still going to have to keep a log book

    As I see it, the real difference in play here is the claim determination basis - actual expenditure vs allowances (per SARS's allowances table).

    In the days when I was a sole proprietor (which is now an embarrassingly long time ago) I preferred capturing the total vehicle expenses in my management accounts anyway, primarily because it meant I was keeping accurate track of what my total vehicle costs were (thereby giving better information for financial management purposes). From there my accountant would write back the personal use percentage of costs as not tax deductible when drawing up the final accounts of the enterprise for tax submission purposes.

    I never compared to see whether going the allowances route might have been more tax efficient, so I can give no insight on that front.
    The trouble with opportunity is it normally comes dressed up as work.

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    Bronze Member Beancounter's Avatar
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    Dave A is right, you cannot claim any travel expenses without a log book, whether you are a sole proprietor or an employee receiving a travel allowance. When including the travel expense in your income statement for a sole proprietor, SARS could ask to see the log book and records of actual expenses to determine whether the claim is valid.

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    Full Member Intothedeepbluesea's Avatar
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    So the logbook is non neg if you want to claim travel expenses no matter how you trade or are employed.

    According to SARS you need to record business travel details in the logbook (where you started your trip, where you went and the reason for the trip). If I left home went straight to the post office to ship a customers order, then went to collect stock at a supplier and then went and got more packaging consumables from another supplier and then finally returned home do I record that as 3 separate trips?

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Intothedeepbluesea View Post
    According to SARS you need to record business travel details in the logbook (where you started your trip, where you went and the reason for the trip).
    This could get interesting.

    Ultimately I log my odo reading when I arrive and leave work, and only occasionally put in a comment. An example of when I put in a comment is when I run up business travel after normal working hours. I wouldn't have any trouble giving details on my business travel in the event of an enquiry, though. It's just not in the logbook.
    The trouble with opportunity is it normally comes dressed up as work.

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    Bronze Member Beancounter's Avatar
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    Make it easier for yourself. Log the date, details and nr of business km's. Log the whole day's km's in one entry and state under details "post office, visit suppliers". In the heading of your log book you state the opening km-reading on 1 March, the closing reading on 28 Feb, total km's travelled and business km's travelled (the total of the log book). If the travel is to be investigated SARS will enquire about who you visited and their contact details and they may contact them to confirm that you do work with them. I've never had a log book in this format rejected.

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    Full Member Intothedeepbluesea's Avatar
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    Just a heads up I submitted my Log book for their request for tax return verification docs and I gave the years opening/closing mileage; distance in km for each business trip with the reasons for travel(more than one if necessary) in a list form; expenses in a itemised list. They were happy with what they saw.

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    What about if you are reimbursing an employee for petrol expenses. I.e. they submit petrol slips to you and then get reimbursed for that? No travel allowance per their employment contracts.

    From business side I'm assuming that the amounts paid to the employee can be deducted from taxable income. Will the employee have to include a portion in their personal tax calc as an income?

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