Is it required to submit a logbook as proof of deprecation for a motor vehicle
10 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Is it required to
submit a logbook as proof of deprecation for a motor vehicle used for business
Q: One of our
clients has been selected for and Income Tax Audit. Our client is a Medical practitioner and we
have deducted deprecation from the taxable income for the assets related
business activities. The SARS auditor is
requesting proof of the deprecation expenses.
We forwarded detailed depreciation schedules (including description of
items, date acquired, cost price, depreciation percentage and can also provide
invoices of capital goods). There is
however a dispute regarding the deprecation claimed for the motor vehicle used
by our client for business purposes.
Apart from the above mentioned the auditor is now also requesting a
logbook for the motor vehicle or else the depreciation will be disallowed.
Our question to you therefore is: Is it required to submit a logbook as proof
of deprecation for a motor vehicle used for business purposes or do we have
grounds for an objection?
A: We assume that
the client (medical practitioner) is trading in his or her own name, i.e. not
in a company. It is also assumed that
the logbook is required because the vehicle has also been used for purposes of
private travel, in other words for purposes of section 23(g).
In the notice of withdrawal of practice notes (with effect
from 1 February 2010) SARS indicated that "In line with the amendment to
section 8, taxpayers are expected to keep better records. This practice note is
withdrawn with effect from years of assessment commencing on or after 1 March
2010” – the reference was to practice note 24.
Section 8 requires that a taxpayer must keep a log book of business (or
private) travel and we submit that it is a SARS practice generally prevailing
that the adjustment must be made on the basis of a log book. SARS is generally entitled to ask for a
logbook, but we submit that in this instance it was required if there was an
element of private use.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.