Date: 13 July 2021
Author: Coenraad de Beer
If you receive a travel allowance from your employer, or use a company provided vehicle, you will need a logbook to record your business trips. If you want to submit a claim for business travel on your income tax return, you will need this logbook to substantiate your claim.
Where can I find such a logbook?
If you are looking for a free logbook, you may use the one supplied by SARS. There are also various electronic devices and cell phone apps available to simplify the process of logging your trips, but no matter what method you use, just make sure your logbook meets the minimum requirements set by SARS.
What information should be recorded for each trip?
· Date of travel
· Kilometres travelled (record opening and closing odometer reading of each trip)
· Reason for the trip
· Details for whom the engagement was undertaken (new requirement since 2021)
· Name of the person you visited (new requirement since 2021)
· Contact details of the person you visited (new requirement since 2021)
Interestingly enough, at the time of writing this article, the SARS logbook did not have separate columns for the new requirements, so we assume this must be recorded in the “Reasons” column of the logbook.
What information about my vehicle is required?
You need to record the odometer reading as soon as the vehicle is taken into use for the first time. After that you need to record the odometer reading in the last day of February each year. The opening and closing kilometers will be used to calculate the total kilometers travelled with the vehicle during the tax year.
In addition to the logbook and kilometer readings, the following information is also required:
1. The vehicle registration number
2. The car make (for example Toyota)
3. The car model (for example Hilux)
4. Year of manufacture
5. Cost price of the vehicle (including VAT but excluding interest)
6. Date of purchase
7. Acquisition method: Purchase Agreement or Lease Agreement
8. Was the vehicle purchased with a maintenance plan? (in case of a company provided vehicle)
Tips for maintaining your logbook during the tax year:
1. Instead of using a complicated or expensive device to log your trips, use your smart phone to take a photo of your odometer reading when you depart and again when you arrive at your destination. Most modern smart phones will store metadata along with the photo. For example when you view the photo in your gallery on an Android phone, you can simply swipe up and you will be able to see the time, date and in some cases even the location where the photo was taken (as long as your location services are enabled on your phone). You can correlate this information with your diary at the end of each week and record this into a spreadsheet or the SARS logbook.
2. If you use multiple vehicles for business travel, keep a separate logbook for each vehicle.
3. You do not need to record private trips, but it does not hurt if you are using a system that records all your trips. A more comprehensive logbook improves your chances of a successful travel claim.
4. The distance travelled between your home and normal place of work cannot be claimed for business purposes and is regarded as private travel. According to SARS’s Interpretation Note 14, Section 5.4.2, if you travel to a client en route to your normal place of work, it will be regarded as business kilometers. This is an interesting interpretation from SARS, because according section 8(1)(b)(i) of the Income Tax Act, you will not be permitted to claim the entire trip, because the distance between your home and place of employment or business is regarded as private. Keep in mind that interpretation notes are not binding on the courts or the taxpayer, so you may use an example like this to give you guidance on what constitute business travel, but just make sure you have a solid justification for your business travel in cases where there might be a gray area. When in doubt, consult your tax practitioner.
5. Be as detailed as possible when describing the reason of your trip. Don’t use vague descriptions like “meeting”, “client” or “business”. Give specific details of why you were travelling, for example, “monthly manager’s meeting”, add the details of the person or entity for whom the engagement was undertaken, for example your client’s name “XYZ Distributors (Pty) Ltd” and include the contact details of the specific person you are visiting, for example “Mr X – Cell number 123 456 789”. If you are visiting a group of people or multiple individuals at the same location, record the details of the most senior person you visited.
This is the basic requirements of a travel claim, based on the deemed cost method. There is a second method where your record the actual expenses of your business travel. This second method is less frequently used because it involves much more admin and seldom yields better results than the deemed cost method.
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