Taxation of motoring benefits

Tax Act.
An example is that of a motoring benefit which an employer may offer to an employee for usage of a motor vehicle as part of the employee’s conditions of employment.
The motoring benefit granted in this case constitutes remuneration and should be subjected to PAYE in terms of the Income Tax Act.

Valuation of motoring benefit
The value of motoring benefit should be determined on the basis of “cost to the employer”.
The cost to the employer in this case is determined on the basis of a deemed cost which is provided for in the Finance Act.

The deemed cost basis of valuing the motoring benefit is also mandatory in the sense that the prescribed amounts are not subject to variation in relation to the running costs or the vehicle’s value.
Calculations of the benefit are based on the engine capacity of the vehicle and are not subject to apportionment between business and private usage of the vehicle allocated to the employee. The benefit is, however, reduced proportionally if the employee uses the vehicle for only part of the tax year.

Deemed Values
The following are the deemed benefits for the purposes of calculating PAYE:
Engine       Value deemed  Value deemed
Capacity     Benefit per          Benefit per                                                       month                          year

1500cc or Less       US$150    US$1 800
1501cc to 2000cc US$200    US$2 400
2001 to 3000cc     US$300    US$3 600
Above  3000cc         US$400    US$4 800

Inclusion of the
benefit for VAT purposes
It should be noted that where the employer is registered for Value Added Tax, the motor vehicle benefit constitutes a taxable supply and should be included on the VAT 7 return for the respective period.

Reminder: VAT for January
Valued clients are kindly reminded that Value Added Tax for January 2013 is due and payable on or before 25th February 2013.

Disclaimer: This article was compiled by the Zimbabwe Revenue Authority for information purposes only. Zimra shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority. 
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