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Wait! My Car Insurance Is Tax-Deductible?

Compare Guru
2017-03-13
Yes, it’s true. Your car insurance can be tax-deductible! Find out what’s involved here along with how to claim back for your insurance.
With the final day for tax returns fast approaching, it's obvious we are all looking at anything that could be considered tax deductible to save money. There are the standard deductions, such as donating to charity, student loans, and business travels. But, did you know you can submit your car insurance? Yes, it is true. But, only if you use your car for business. If you are self-employed and use your personal vehicle for business, you are entitled to a tax deduction for your car insurance.

If You Use Your Car Only For Business

Plain and simple, if your car is part of your business, and exclusively used only for work, you may be able to write off the full cost of car insurance. For example, an independent sales professional who travels for work can take the deduction. However, only the actual mileage used for business travel is deductible. In other words, if you drive a vehicle 10 000 km for business and 10 000 km for personal use (a total of 20 000km annually), your deduction will cover half of your overall use. However, if your car is used only to transport you to your office, it’s considered a personal vehicle and you can't deduct its insurance premium from your taxes.

If You Use Your Car For Both Business And Pleasure

If you use your personal car for both business and pleasure, it gets a bit more complicated. It is more than likely that you will be asked to produce some sort of 'logbook' (see example below)) or proof of the mileage you travelled "on business time". An example of this could be an Uber driver who uses his personal car for driving customers around. Whenever they are actively looking for and transporting customers to their destinations, all expenses incurred during this time qualify as a business expense and is, therefore, tax deductible. Any time spent "offline" or not using the app, such as when the driver is heading home after a shift, does not qualify. Take a look at SARS Travel Logbook here.

How To Claim Back For Car Insurance

  1. Keep precise and organised numbers of your mileage in a log book.
  2. Keep driving records to avoid audit issues.
  3. Mileage can be calculated in two ways:
    1. Actual expenses.
    2. SARS 'rates per kilometre' mileage calculation.
Failure to keep accurate records of all business driving may force you to pay back taxes or incur a penalty. You may also be asked to produce evidence of all driving expenses in an audit.
Need cash back at the end of the month? Get a quote today and start saving

SARS 'Rates Per Kilometre'

The South African Revenue Service has a tax deductible chart, which will help you work out your mileage calculation to determine your car insurance tax return. The table shows the vehicle value and includes Value-Added Tax (VAT). The table below is for the period between 1 March 2017 to 28 February 2018.
Value Of The Vehicle (R)
Fixed Cost (R p.a)
Fuel Cost (c/km)
Maintenance Cost (c/km)
0 - 85 000 28 492 91.2 32.9
85 001 - 170 000 50 924 101.8 41.2
170 001 - 255 000 73 427 110.6 45.4
255 001 - 340 000 93 267 118.9 49.6
340 001 - 425 000 113 179 127.2 58.2
425 001 - 510 000 134 035 146.0 68.4
510 001 - 595 000 154 879 150.9 84.9
more than 595 000 154 879 150.9 84.9
   
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