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Cape Town - Businesses must consider the income tax and VAT consequences that the e-toll system will have on them and on their employees, according to Beric Croome, a tax executive at the law firm ENSafrica.
It is important for businesses to consider the changes in their financial strategy in a case where the employee is reimbursed for business travelling or provided with a company vehicle.
The implications of e-tolls on fleet management must also be considered.
"Where an employee receives a reimbursement of travelling at a rate not exceeding the amount specified by the minister of finance, it may be possible to seek the reimbursement of e-toll costs without adverse tax consequences," said Croome.
"However, it would be preferable if the rules regulating such reimbursement are clarified in this regard."
In the case of a company or employer owned vehicle, the employer will be liable to pay the e-tolls and should be entitled to deduct that cost as a deduction for tax purposes.
Croome said no adverse tax consequences should arise concerning an employee who is subject to fringe benefits tax on the usage of the motor vehicle.
"In those cases where an employee receives a travelling allowance to finance the cost of travelling on the employer’s business, a decision will need to be made whether to claim the actual expenditure incurred regarding the motor vehicle - including the cost of e-tolls - or to rely on the table of prescribed costs as set out by the minister of finance from time to time," he explained.
"Those businesses, which own a fleet of vehicles for renting out to clients or which own trucks to transport goods around the country, will face an increase in costs which will, no doubt, be recovered from their clients."
The cost of e-tolls will be deductible for tax purposes in terms of section 11(a).
The VAT element should be recoverable where the business is registered for VAT purposes and the vehicle is used for taxable business purposes.
It is important for businesses to consider the changes in their financial strategy in a case where the employee is reimbursed for business travelling or provided with a company vehicle.
The implications of e-tolls on fleet management must also be considered.
"Where an employee receives a reimbursement of travelling at a rate not exceeding the amount specified by the minister of finance, it may be possible to seek the reimbursement of e-toll costs without adverse tax consequences," said Croome.
"However, it would be preferable if the rules regulating such reimbursement are clarified in this regard."
In the case of a company or employer owned vehicle, the employer will be liable to pay the e-tolls and should be entitled to deduct that cost as a deduction for tax purposes.
Croome said no adverse tax consequences should arise concerning an employee who is subject to fringe benefits tax on the usage of the motor vehicle.
"In those cases where an employee receives a travelling allowance to finance the cost of travelling on the employer’s business, a decision will need to be made whether to claim the actual expenditure incurred regarding the motor vehicle - including the cost of e-tolls - or to rely on the table of prescribed costs as set out by the minister of finance from time to time," he explained.
"Those businesses, which own a fleet of vehicles for renting out to clients or which own trucks to transport goods around the country, will face an increase in costs which will, no doubt, be recovered from their clients."
The cost of e-tolls will be deductible for tax purposes in terms of section 11(a).
The VAT element should be recoverable where the business is registered for VAT purposes and the vehicle is used for taxable business purposes.
