Can I Claim VAT On A Double Cab Bakkie in South Africa?
If you use a double cab bakkie for business purposes in South Africa, you may be wondering if you can claim back the VAT paid on the vehicle. With complex tax laws and frequently changing legislation, knowing what expenses are VAT deductible can be confusing.
This article will discuss the specifics of claiming VAT on double cab bakkies in South Africa. We’ll look at how double cab bakkies are classified by SARS, what the current laws and recent changes allow, and the exact requirements you need to meet to claim the VAT.
Defining Double Cab Bakkies
Before looking at the VAT implications, it’s important to understand exactly what constitutes a double cab bakkie in the eyes of SARS. A double cab bakkie is classified as a goods vehicle with an open back loading area and a second row of seats behind the driver and front passenger seats. They fall under the category of light delivery vehicles (LDVs). To qualify as an LDV, the vehicle needs to meet these basic criteria:
- Gross vehicle mass under 3,500kg
- Payload capacity of at least 1,160kg
- An open cargo area separated from the cab
It’s worth noting that the definition focuses on the overall construction and capability of carrying goods, not the actual day-to-day use. This means a private double cab could still meet the SARS definition of an LDV. The classification as an LDV rather than a standard passenger vehicle is important in determining VAT eligibility.
VAT Categories for Motor Vehicles
In South Africa, motor vehicles fall into one of three VAT categories set out by SARS:
Standard-rated vehicles: These attract 15% VAT on the purchase price. Private and commercial vehicles fall into this category unless explicitly exempt.
Exempt vehicles: No VAT charged on purchase for select vehicles like buses for scheduled transportation services. Read about common items that are exempt from VAT in South Africa.
Zero-rated vehicles: Certain vehicles are zero-rated, meaning VAT is charged at 0% purchase price. This category applies to goods vehicles meeting weight, payload, and other criteria.
Double cab bakkies may fall into the zero-rated category, provided they meet the additional conditions around carrying capacity and use. We’ll explore those specifics next.
Requirements To Claim VAT on Double Cab Bakkies
If your double cab bakkie qualifies as a commercial vehicle, you may be able to claim VAT if you meet the following requirements:
Payload weight of 1,160kg or more
As covered earlier, the bakkie needs the capability to carry over 1,160kg in the open cargo area. This is focused on technical capacity, not actual usage.
Used exclusively for business
100% business use is required, with detailed logbooks to track this. Any private use disqualifies the VAT claim. Recent trips to the hardware store for materials or driving kids to school would violate this condition.
VAT-registered business entity
The double cab bakkie must be owned and registered under a VAT-registered business with SARS. You cannot claim the expense under your tax returns.
Valid tax invoices
You must retain the original purchase invoices listing the supplier’s VAT registration details. Logbooks should also be maintained recording business use.
Insurance and maintenance costs
In addition to claiming VAT on the vehicle purchase price, you can also claim the VAT portions of insurance, repairs, and running costs like fuel incurred exclusively for business purposes under the same entity.
Essentially, SARS wants to see robust evidence that the double cab bakkie is utilized commercially 100% of the time by a registered VAT vendor before allowing the significant input VAT claim. Thus, detailed record-keeping and strict business use are vital.
Practical Examples
To illustrate if and how you can claim VAT on a double cab bakkie, here are some practical examples across different scenarios:
Scenario 1 – Sole trader builder
John is a sole trader registered for VAT operating his small construction business. He purchases a new double cab bakkie for R300,000 (excl. VAT) to transport building materials and tools to project sites. The vehicle meets LDV specifications for cargo and weight capacity. John maintains a detailed logbook recording trips made exclusively for his business.
In this case, John can zero rates the purchase and claim back R45,000 input VAT (15% x R300,000) from SARS as the bakkie qualifies and is used 100% for business purposes within a VAT-registered entity.
Scenario 2 – Farming equipment
Mary owns a family farm business registered as ABC Farming (Pty) Ltd, a private company. She buys a new double cab bakkie for R250,000 (excl VAT) through the company to use on the farm for tasks like transporting animal feed. It meets the SARS criteria as an LDV. Her detailed logbooks show the vehicle is used 100% for farming operations.
Despite ABC Farming not being VAT registered, Mary can register the company for VAT voluntarily and claim back R37,500 input VAT on the bakkie purchase. Even though she does not collect VAT on produce sales, the input claim outweighs this.
Scenario 3 – Sales rep’s double cab
John is a medical sales rep for PharmaCo Ltd and purchased a new double cab bakkie privately for R400,000 (incl. VAT) primarily to visit regional hospitals he services. Although John occasionally carries medical samples, the vehicle is registered personally and used privately for 80% of trips.
Because John buys the double cab in his capacity and does not meet the 100% business use test, neither he nor PharmaCo can claim back any input VAT on the purchase price or running costs.
Can I Claim VAT On A Double Cab Bakkie in South Africa?
To recap, the answer to “Can I claim VAT on a double cab bakkie in South Africa?” depends on these key factors:
- The vehicle meets the technical definition of a light delivery vehicle
- Registered and used exclusively for business by a VAT vendor
- Strict expense records are maintained
Essentially, SARS wants robust evidence that the double cab bakkie is wholly utilized commercially before allowing firms and sole proprietors to benefit from zero-rate VAT claims. For any private use, input VAT cannot be claimed.
Given the tax savings, purchasing within your business entity rather than privately can make financial sense. However, the purpose and usage conditions imposed by SARS must be followed diligently, or harsh penalties and interest on incorrectly claimed amounts apply.
Conclusion
Claiming VAT on a bakkie can be confusing, but understanding the latest SARS classification and requirements allows you to claim eligible expenses. You must ensure your specific double cab bakkie meets technical specifications, business usage is meticulously recorded and hits the 100% threshold, your entity making a claim is VAT registered, and valid tax invoices, logbooks, and reporting are maintained. However, if you are facing problems calculating your VAT, use our free VAT calculator to do this hectic task.
FAQs
Can I buy the bakkie privately but claim the VAT through my business?
No, to claim the VAT, the vehicle needs to be purchased by and registered to the VAT-registered entity directly responsible for expenses and usage. Private purchase disqualifies VAT claims.
What kind of logbook do I need to keep for business use?
Logbooks should detail each trip’s purpose, opening/closing odometer readings, and kilometers traveled, and match to other records like fuel claims. Electronic logbooks with automated reporting are preferable.
Can I still claim a portion of VAT if I use the bakkie 60% for business and 40% for private?
Unfortunately, only vehicles used 100% exclusively for business purposes qualify for input VAT claims on purchase and running expenses. Any private use disqualifies the claim.
