Use of Motor Vehicle Fringe Benefit

[Pastel Payroll Consultant]

Found some interesting information on SARS' website:

Where a motor dealer includes a maintenance contract in the purchase price of a vehicle, the value of the maintenance contract should be excluded from the calculation of the value of the benefit received by an employee when the right of use is granted to such employee.

https://www.sars.gov.za/home.asp?pid=3785#right%20use%20of%20a%20motor%20vehicle

[Dave A]

I recall mention of a problem with this somewhere along the line. With the maintenance portion being embedded in the sales price, how do you assign a value to the maintenance contract portion?

[sterne.law@gmail.com]

Well this will be sorted out shortly. The consumer protection act has a section specifically dealing with the bundling of products. Each item is a purchase item so to speak.

[eitai2001]

Ahhh ... taking the IAS18 Component approach in accounting to an easier to determine level :P

[Pastel Payroll Consultant]

You are correct, this does pose a problem. The best I could suggest would either to be to contact the dealer who sold the car and request the breakdown; alternatively it would probably require an estimate which you could gain through some investigation into similar cars' maintenance plans.

[Dave A]

The best I could suggest would either to be to contact the dealer who sold the car and request the breakdown

You're not likely to get that from the dealer. As far as I know it's not in their interest to split the costs.

[eitai2001]

You're not likely to get that from the dealer. As far as I know it's not in their interest to split the costs.

If they follow IFRS and are audited, they have to split the costs ... IAS18-Revenue says you must split a sale into it's sub-components and account for them separately ... so chances are they should be able to provide a breakdown ... perhaps not the sales guy, but someone must.