Value-Added Tax
848. Input tax deduction in respect of motor vehicles
December 2000

The definition of ‘motor car’ has been broadened to include double cab light delivery vehicles, station wagons and minibuses. This largely confirms the status quo, namely that purchasers of such vehicles are denied an input tax deduction unless they deal in such vehicles. An input tax deduction is denied in respect of the acquisition of any "motor car" except where the acquirer is effectively trading in motor vehicles. A vehicle is, inter alia, a motor car as defined if it is constructed or adapted wholly or mainly for the carriage of passengers. A few years ago it was held by a Special Court that a so-called double cab 4x4 was a "motor car" as defined. This judgement had the effect of confirming that most purchasers of such vehicles are denied an input tax deduction in respect of the cost thereof.

However, SARS has noted that double cab light delivery vehicles have become increasingly popular as private family cars, and that:

"Some motor manufacturers have started making adjustments to certain models by increasing the loading space. If this should lead to these models falling outside the ambit of the definition of ‘motor car ‘input tax will become deductible, which may lead to the distortion of consumer preferences as far as this type of vehicle is concerned."

Accordingly, in order to maintain the status quo and confirm current Revenue practice, the definition of "motor car" has been broadened to include a:

"station wagon, minibus, or double cab light delivery vehicle."

It should be noted that notwithstanding this amendment, where a vehicle is "suitable for carrying more than 16 persons", it is still specifically excluded from the meaning of a "motor car".

Deloitte & Touche

Definition "motor car" VAT Act: S 1