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How to calculate remaining tax value for Motor Vehicle Recoupment
Posted 30 June 2015 under
The remaining tax value will be the wear and tear/depreciation which can still be claimed on the vehicle. Vehicles are written off over 3 years.
If wear and tear/depreciation was claimed on the car in previous years, and one or two years of allowance can still be claimed, this amount will be the remaining tax value. Please note that Inland Revenue looks at the remaining tax value as if a full 1/3 allowance was claimed. In other words that no apportionment is made for the business vs private use of the vehicle. Therefore, you will need to provide us with the tax value remaining that takes this into account.
For example a car was bought for N$30,000 in 2013. Wear and tear (Cost of car divided by 3 years) was claimed in 2013 and 2014. In 2015 the car is sold, but the remaining tax value of the car is N$10,000. You would enter this amount when asked for the remaining tax value.
Another practical illustration would be as follows:
A car was bought for N$30,000 in 2013. Wear and tear (Cost of car divided by 3 years) was claimed in 2013 and 2014. During this time you used the vehicle 50% for business purposes. In 2015 the car is so. The remaining tax value of the car is N$10,000 (as this is the last year during which you were entitled to claim the wear and tear). You would enter this amount when asked for the remaining tax value. You will see that the remaining tax value does not take into account your business vs private use.
Please note that no wear and tear should be claimed in the year that the car is sold (if you claimed wear and tear in the year during which you sold the vehicle, your tax value will reduced by that year's capital allowance that may be claimed).