The abuse of vehicle allowances will be scrutinised after Wednesday’s budget announcement of the government’s intention to review fringe benefit taxation on vehicle allowances and the ad valorem excise duty structure on vehicles.

The abuse of vehicle allowances will be scrutinised after Wednesday’s budget announcement of the government’s intention to review fringe benefit taxation on vehicle allowances and the ad valorem excise duty structure on vehicles.

Economist and motor industry analyst Tony Twine told that it was expected that government would try to eradicate individual car allowance gains resulting from people taking part of their pay as car allowances and settling the excess at the end of the tax year.

Twine also believed that the government was going to increase the excise duty load on luxury cars when reviewing the ad valorem excise duty structure. Currently, these are considered as consumption taxes and would need to be redefined as luxury taxes in line with government’s tax objectives.

Naamsa president Ian Robertson said he welcomed the finance minister’s initiative to consult with all relevant parties when the fringe benefit taxation of vehicle allowances and the ad valorem duty structure were reviewed.

Duane Newman, automotive industry leader at Deloitte, said he believed there would be a possible change in the duty structure of vehicles to increase the ad valorem tax exemption on vehicles with the ability to transport 12 or more people, to 15 or more.

He added that the exemption could possibly rise to 18 once taxi recapitalisation came into effect.

Twine said the R4 billion in tax cuts for individuals was unlikely to do a lot for people who bought new cars. This is because those with incomes of up to R150 000 were the main beneficiaries while the average price of a new car in 2003 was R160 000.

Original article from Car