Question (10 marks)

Noah Norton has been given the choice by his employer company to select, as from 1 March 2022,
either the free use of a company car with all expenses of running the car for both business and
private purposes fully paid for by the company, or a travel allowance of R5 000 per month for the use
of his own car for business purposes. The following information is also relevant:

 Noah will not keep a detailed logbook when he uses the company car, but will keep one should he
opt for the travel allowance and estimates he will travel a total of 40 000 km a year. Of this, 25 000
km will be for private use.
 If the takes the company car option, the company will purchase the car on 1 March 2022 for
R214 000 (including VAT). There is no maintenance plan for this vehicle. The company will bear
all of the vehicle-related costs.
 If Noah chooses the travel allowance option, he will purchase a car on 1 March 2022, at the same
cost. The company will grant him an interest-free loan of R214 000 to purchase the car.
 The interest-free loan will be repaid at the end of five years.
 Assume the official rate is 7% throughout the year.

YOU ARE REQUIRED TO:

1. Calculate the taxable portion of the right of use of a motor vehicle should Noah chooses the
company car option. (3)
2. Calculate the taxable fringe benefit on the interest-free loan. (2)
3. Calculate the taxable portion of the travel allowance should Noah chooses the travel allowance
option. Use the actual distance travelled and the deemed expenditure as per the table. (5)