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CaseLaw
CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 1290
Experience:  BCom; LLB; Masters in Law
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I want t find out what the benefits are of buying a car

Customer Question

I want t find out what the benefits are of buying a car through my business in South Africa. I would also like to find out how I would go about this and if there are any advantages to this.
Submitted: 5 months ago.
Category: South Africa Law
Expert:  CaseLaw replied 5 months ago.

Hi there and thank you for your question,

I will try to assist you with your legal question but please feel free to ask as many follow up questions as you like until you are 100% satisfied.

Well from a legal point of view, if you buy the car in the name of your business (I assume a company, or a close corporation) then the business becomes the owner of the vehicle. If anything happens to your business (e.g. liquidation) then you won't have a claim against the vehicle as you would if you bought the vehicle in your personal name. Really the big difference is who the owner of the vehicle is. If it is in the name of your business, your personal creditors would not be able to attach the vehicle to settle judgments that they obtain against you in your personal name.

From an accounting point of view, it becomes quite complicated since SARS has complex rules about how much you can claim for a car. That, an accountant will need to explain.

To set this up, you really just need to ensure that when you buy the vehicle it is registered in the name of your business. You can be the "representative", but the business needs to be listed as the "registered owner".

Does that assist?
If my answer hasn't answered all of your questions, please send me a REPLY with follow up questions so that I can continue to assist you in this same thread for as long as you need. Let me know if you need more advice - dont just rate my answer as "bad".

If my are HAPPY with my answer then please click one of the STAR ratings or the SMILEY FACES to rate my answer!

Good luck and best regards,

CaseLaw

Customer: replied 5 months ago.
Hi ThereThanks for the reply. This makes sense.
Are there no accountants on this site to answer the question more specifically?
As in how much can a business pay for a vehicle and how much can you claim personally for a vehicle.
Also is it worth buying a vehicle in the name of the business, as will it help you tax wise and eventually
as an asset?Thanks and Kind Regards
Expert:  CaseLaw replied 5 months ago.

What I can tell you is that if the vehicle is a bakkie or something that is legitimately a business vehicle, then it is worth buying the vehicle in the name of the business because it is tax deductable. If the vehicle is a BMW / Mercedes then SARS might say that it is not a valid business expenses which has been incurred in the production of income, which means that you can't deduct the expense from your income. So really the type of vehicle you intend buying is important.

Also, if you buy the vehicle in the business name, and you use the vehicle on a daily basis for your personal use, then SARS will tax you on that fringe benefit! Which is not great.

This site can assist with legal questions. As far as I know not accounting - like how it will help you tax wise.

If my are HAPPY with my answer then please click one of the STAR ratings or the SMILEY FACES to rate my answer!

Good luck and best regards,

CaseLaw