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Edited version of your written advice
Authorisation Number: 1051208421419
Date of Advice: 7 April 2017
Ruling
Subject: Fringe benefits tax: car fringe benefits
Question 1
Does the base value of a car in terms of subsection 9(2) of the Fringe Benefits Tax Assessment Act 1986 include the delivery charge associated with the purchase of a non-business accessory that is fitted to the car?
Answer
Yes.
This ruling applies for the following periods:
1 April 2016 to 31 March 2017
The scheme commences on:
The scheme has commenced.
Relevant facts and circumstances
The company purchased a non-business accessory to be fitted to a motor vehicle.
A delivery charge was incurred as part of the purchase.
Subsequently the company purchased a motor vehicle.
Some months later the non-business accessory was fitted to the motor vehicle.
There was a cost incurred for fitting the non-business accessory to the motor vehicle.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986
Subsection 9(2)
Subsection 136(1)
Reasons for decision
Question 1
All legislative references are to provisions of the Fringe Benefits Tax Assessment Act 1986 unless otherwise specified.
Summary
The relevant legislation is subsection 9(2) and subsection 136(1).
The terms of these provisions are examined and applied.
The base value of a car includes the cost price of a non-business accessory that is fitted to the car.
The cost price of the accessory includes the delivery charge incurred in acquiring the accessory.
The delivery charge is thus part of the base value of the car.
Detailed reasoning
In considering the issues raised by the question the relevant provisions are subsection 9(2) which deals with the taxable value of car fringe benefits using the statutory formula, and subsection 136(1) which contains definitions of terms used in the legislation. In this case it is the definitions of the terms “cost price” and “fitting” that are relevant.
The non-business accessory has been fitted to the car after the car was acquired.
The cost price of the non-business accessory is added to the base value of the car in terms of subparagraph 9(2)(a)(iii).
It is thus necessary to consider the elements of the cost price of the non-business accessory.
The definition of “cost price” in subparagraph 136(1)(b)(ii) relates to expenditure incurred for the act of fitting the non-business accessory.
The term “fitting” is in turn defined in subsection 136(1) to include the acquisition of the accessory.
The delivery charge is an integral part of the acquisition of the accessory and thus the delivery charge is part of the expenditure incurred for fitting the accessory.
The delivery charge is consequently part of the cost price of the non-business accessory.
Therefore, as the cost price of the non-business accessory fitted to the car is part of the base value of the car in terms of subparagraph 9(2)(a)(iii), the delivery charge is included in the base value of the car.
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