Interpretation Note - No. 72 - Right of use of motor vehicle

Sep 18, 2026

Uploaded by Patrick

Interpretation Note No. 72 dated 22 March 2013 explains the income tax consequences for employees when an employer grants the right of use of a motor vehicle, commonly known as a company car fringe benefit. It provides guidance under the Income Tax Act No. 58 of 1962, focusing on paragraph 7 of the Seventh Schedule, including taxable benefit principles, valuation methods for private use, reductions, and circumstances where the private use value is nil.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages30

Reading Time1 h 16 min

AccessFree to download

Purpose

Background

The law

Application of the law

Taxable benefit

Value of the taxable benefit

Value of private use

Fixed percentage per month x determined value

Vehicle held under an operating lease

Reduction of the value of private use on assessment

Right of use of more than one motor vehicle for private purposes

Reduction for business use

Reduction when the employee incurs expenditure

Circumstances under which the value of private use is deemed to be nil

Available for use by employees in general

Nature of employee duties

Consideration

Employees’ tax

Sundry provisions

Transfer of employer’s rights and obligations under a lease

Motor vehicle rented to the employer by the employee

Company car and travelling allowance

Acquisition of an asset

Conclusion

Annexure A – The law

Annexure B – Extract of income tax regulation

Annexure C – Extract from the Value-Added Tax Act

INTERPRETATION NOTE: NO. 72 DATE: 22 March 2013 ACT : INCOME TAX ACT NO. 58 OF 1962 (the Act) SECTION : PARAGRAPH 7 OF THE SEVENTH SCHEDULE TO THE ACT SUBJECT : RIGHT OF USE OF MOTOR VEHICLE CONTENTS PAGE Preamble .............................................................................................................................. 2 1. Purpose ..................................................................................................................... 2 2. Background ............................................................................................................... 2 3. The law...................................................................................................................... 2 4. Application of the law................................................................................................. 3 4.1 Taxable benefit .......................................................................................................... 3 4.2 Value of the taxable benefit ....................................................................................... 3 4.2.1 Value of private use ................................................................................................... 3 4.3 Fixed percentage per month x determined value ....................................................... 4 4.3.1 Fixed percentage ....................................................................................................... 4 4.3.2 Per month.................................................................................................................. 5 4.3.3 Determined value ...................................................................................................... 5 4.4 Vehicle held under an operating lease ..................................................................... 10 4.5 Reduction of the value of private use on assessment .............................................. 10 4.5.1 Right of use of more than one motor vehicle for private purposes ........................... 11 4.5.2 Reduction for business use ..................................................................................... 12 4.5.3 Reduction when the employee incurs expenditure in relation to the motor vehicle ... 13 4.6 Circumstances under which the value of private use is deemed to be nil................. 17 4.6.1 Available for use by employees in general............................................................... 17 4.6.2 Nature of employee duties ....................................................................................... 18 4.7 Consideration .......................................................................................................... 19 4.8 Employees’ tax ........................................................................................................ 19 4.9 Sundry provisions .................................................................................................... 21 4.9.1 Transfer of employer’s rights and obligations under a lease .................................... 21 4.9.2 Motor vehicle rented to the employer by the employee, his or her spouse or child – section 8(1)(b)(iv) ................................................................................................. 21 4.9.3 Company car and travelling allowance in respect of the same motor vehicle ........... 22 4.9.4 Acquisition of an asset – paragraph 2(a) and 5(2) ................................................... 22 5. Conclusion .............................................................................................................. 22 Annexure A – The law ......................................................................................................... 24 Annexure B – Extract of income tax regulation: Fixing of rate per kilometre in respect of motor vehicles for the purposes of section 8(1)(b)(ii) and (iii) with

FAQs

What is Interpretation Note No. 72 about?

It provides guidance on income tax consequences for an employee when an employer grants the right of use of a motor vehicle, known as a company car fringe benefit.

Why is the right of use of a motor vehicle treated as taxable income?

The private or domestic use of a motor vehicle by an employee is regarded as a taxable benefit, and its value is included in the employee’s gross income.

When do the latest legislative changes for company cars apply?

The latest legislative changes are effective from 1 March 2013 and apply to years of assessment commencing on or after that date, such as the 2014 year of assessment.

Sep 18, 2026

Uploaded by Patrick