I trust a log book recording business vs private travel is available.
You present two scenarios.
1. The member is acting as an agent of the company. All expenses are dealt with in the company's hands and the member incurs a fringe benefit tax liability.
2. The member rents the vehicle to the company. The rent is treated as income to the member, who in turn will be able to claim allowable expenses in the generation of that rental income.
The third scenario that comes to mind is a variant on scenario 2 - the company pays a per-kilometer travel claim i.r.o. the business use portion. Similar tax treatment to scenario 2 applies.
As long as there's no evidence of tax avoidance, ordinarily SARS's interest is simply that the tax liability is appropriately reported and paid over.
Personally I'm kinda curious if you follow those through all the way, which one works out to be the most tax efficient overall.
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