Compensation for the use of a personal car: calculation procedure and features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Many employees in the process of performing their duties use a private car. They transport goods or company executives, meet with suppliers, or perform other important activities. Therefore, they require the director to transfer compensation for the use of a personal car. Its size can vary significantly in different situations, since the characteristics of the machine, the actions performed by the employee and the norms established by law are taken into account.

What expenses are reimbursed?

The amount of compensation for the use of a personal car depends on various factors. The leaders of many companies hire only specialists who have their own machines, which allows them to cope with many job responsibilities.

Based on Art. 188 of the Labor Code, an employee may require the management of the company to transfer compensation for the use of a personal car. To do this, he must prove that he had to incur certainexpenses. The following funds are paid by the head of the firm:

• compensation for depreciation of property during its use for work purposes;
• Actual costs associated with the operation of a car, represented by the cost of gasoline, repairs or maintenance.

The amount of compensation should be discussed between the two participants in the employment relationship in advance, and also fixed in writing. Usually the procedure is performed in the process of concluding an employment contract. It is allowed to enter this information into an additional agreement to an existing employment contract.

What information is included in the contract?

When assigning compensation to an employee for using a personal car, numerous parameters of the car are taken into account. All information regarding the appointment of compensation is entered into the employment contract. These include:

• exact parameters of a car belonging to a company employee;
• the procedure for operating a car for work purposes;
• grounds for owning a car, since an employee can be not only its owner, but also a trustee, as well as a tenant;
• the period during which job duties will be performed with the help of the vehicle;
• exact amount of compensation;
• other costs associated with the operation of the machine;
• documents that must be prepared by the employee so that he can confirm his expenses for the car;
• the order on the basis of which they musttransfer funds;
• timeframes during which worker's compensation is paid.

If at least one clause of the contract is violated, the employee may refuse to use his car for work purposes.

Which costs are reimbursed?

Personal Vehicle Worker's Compensation is designed to cover the following costs:

• maintenance;
• payment for gasoline;
• being in paid parking throughout the working day;
• car wash;
• other costs associated with operating the machine for business purposes.

When calculating this payment, it takes into account how quickly the car wears out, how much money is spent on refueling, and also what is the cost of scheduled maintenance. The employer has the right to require the employee to hand over various checks or receipts confirming certain expenses.

What documents are required?

Payment of compensation for the use of a personal car is assigned only upon transfer to the employer of official documents confirming certain expenses. These documents include:

• waybills that confirm that a particular machine was actually used to solve the working issues of a particular company, and the form of this document is developed separately by each organization;
• cash receipts issued at gas stations or service stations;
• reports compiled by an employee of the organization;
• a journal that records all the movements of an employee in his car to resolve work issues.

If there is an order, compensation for the use of a personal car is assigned. A sample of this document can be viewed below.

Taxation of payments

The expenses of enterprises related to the maintenance of official vehicles are used to reduce the tax base during the determination of income tax. But this is possible only if there are official documents confirming such costs. At the same time, it is important that the machine is really used to solve work issues.

This takes into account the following nuances:

• no personal income tax is charged on compensation for the use of a personal car, and insurance premiums are not transferred;
• the amount of this payment should not exceed the rate established by law;
• if the compensation exceeds the norm, then the excess cannot be used to reduce the tax base for income tax.

This payment is assigned only during the period when the employee of the enterprise directly performs his labor duties. If he is on sick leave or on vacation, then the cost of compensation for the use of a personal car by an employee cannot be used to reduce the tax base for income tax.

How to apply?

Employers who employ employees who have their own vehicles should know how to competentlyto compensate them for the use of the car. For this purpose, appropriate documentation is prepared competently. The procedure for assigning compensation involves the following steps:

• when hiring a citizen, it is necessary that information on the need to transfer compensation be included in the employment contract, since the new employee will use his car to perform the tasks of the head;
• the title documentation for the car is transferred to the employer, and this includes not only the registration certificate, but also the title, and if the citizen is a trustee, then a copy of the power of attorney on the basis of which he uses the car is additionally transferred;
• further, all conditions of cooperation are stipulated, which should be beneficial for both participants in the employment relationship;
• if a long-term employee buys a car, which he starts using for official purposes, then an additional agreement is formed to an existing employment contract;
• if the car is transferred for use by other officials of the company, then an act of acceptance and transfer of the car is drawn up;
• Monthly or weekly, an employee of the company draws up a report that indicates all expenses for a car used for work purposes;
• this report is accompanied by numerous payment documents confirming expenses and presented by various checks, invoices or other similar papers.

The direct owner or others can drive the caremployees of the company appointed by the responsible persons by order of the employer.

Issuing an order by the head

Compensation for the use of a personal car is paid only if the necessary documents are correctly completed. This also includes the issuance by the director of the company of an order, on the basis of which a payment is made to the owner of the vehicle.

It is allowed instead of the permanent issuance of orders to fix the need for accrual of compensation payments in the company's local internal acts.

Order form can be developed by each company separately. This document contains the following information:

• name of the company where the car owner works;
• his position and full name;
• name and parameters of the vehicle used for operation;
• conditions under which compensation is paid, for example, it can be a fixed amount of money transferred to the employee at the end of each month, and can also be calculated on the basis of payment documents submitted by the employee to the employer.

An employment contract or an additional agreement serves as the basis for issuing an order. These documents must contain information that a particular employee uses his own car during the performance of work duties.

Which regulations apply?

Compensation rates for the use of a personal car must be taken into account by the company's management, since theydepends on whether it is possible to reduce the tax base for income tax on expenses associated with the transfer of compensation to the owner of the property, represented by an employee of the company. These norms are fixed at the state level. These include:

• if a passenger car is used, the engine capacity of which does not exceed 2 thousand cubic meters. see, then the rate of payment is 1, 2 thousand rubles;
• if the engine capacity exceeds 2 thousand cubic meters. see, then the norm is 1.5 thousand rubles;
• if a motorcycle is rented, then the fee for it is within the norm is 600 rubles.

The use of trucks is not regulated by any law, as such costs are included in another category of company costs.

Can I rent a car?

Compensation for the use of a personal car is not subject to personal income tax, but it is used to reduce income tax only if its amount does not exceed the norms established by law. But it is often required to transfer to the owner of the car an amount that exceeds this rate. To prevent the need to pay a significant tax, the head of the company may decide to draw up a lease agreement with the employee.

When generating this document, it is taken into account whether a car with a crew will be rented or not. Additionally, this agreement contains information on how the machine will be serviced.

Such an agreement is drawn up only inin writing, but does not require notarization or state registration. The actual car is the subject of the agreement, therefore, information about its registration numbers is entered into the text, as well as data from the Title and registration certificates are overwritten.

If a company employee uses a car on the basis of a power of attorney, then when drawing up a lease agreement, you will have to involve the direct owner of the property. If a car is rented without a crew, then a valid OSAGO policy is additionally attached to it.

The nuances of using the loan mechanism

Since personal income tax and other taxes are not paid from compensation for the use of a personal car, the employee often agrees to a specific registration method, which consists in the fact that the car is transferred using the loan mechanism to the employer. To do this, the following nuances are taken into account:

• The process of applying the loan mechanism involves taking into account the requirements of Art. 689 GK;
• under such conditions, the car is transferred to the company for use, so not only the owner, but also other employees of the company can act as a driver;
• it is the company that is obliged to deal with the maintenance of the vehicle, its repair, accounting for gasoline, as well as other significant issues, which greatly simplifies the process of calculating personal income tax and taxes of the organization;
• it is allowed to indicate in the contract that the car will be used exclusively by the direct owner;
• The benefits of using a loan mechanism include that it simplifies the processdetermining the costs of the company for the maintenance and use of the car;
• necessarily the company is the buyer of the OSAGO policy;
• it is not required to transfer any additional remuneration to the employee, which has a limited amount;
• if the machine is transferred to control the machine to another employee of the company, then the company's management will have to draw up additional personnel documents.

An accountant must competently enter into the 1C program compensation for the use of a personal car. It depends on the correctness of accounting whether a company can count on a reduction in the tax base for income tax.

Nuances of drawing up a GPC agreement

Another possibility for using a personal car employee for the purposes of the company is the drawing up of a GPC agreement between the management of the company and the direct car owner. This agreement is an alternative to an employment contract.

Under such an agreement, the employee is the contractor, and the company is the customer. Such cooperation is not regulated by the provisions of the Labor Code.

Can I dispute the compensation?

The calculation of compensation for the use of a personal car should be based on the documentation submitted by the employee to the accounting department of the company. But often even experienced professionals make mistakes, which are usually detected by tax inspectors in the process of checking the organization.

The most frequently disputed amount of payment by employees of the Federal Tax Service. There may be several reasons for this:

• absence of payment documents presented by checks, invoices, orders or other papers;
• the procedure for using a car owned by a company employee for organizational purposes is incorrectly drawn up;
• Missing various important documents for the car submitted by STS or PTS.

Challenge is carried out in court. Often the reason is even the fact that the car is transferred by a citizen who can use it on the basis of an ordinary, and not a general, power of attorney, therefore he does not have the right to transfer the car for use by third parties.

Rules for payment of compensation for the use of a company car for personal purposes

Another situation is when an employee receives a car from an employer. It is used to solve important issues, but often an employee needs to use it for personal purposes. This raises the question of how to formalize such relationships. Therefore, the following possibilities can be used for this:

• verbal agreement between the head and the employee of the company;
• drawing up a rental agreement with an employee of the company;
• management issuing an order to transfer the car to an employee.

When calculating the company's expenses, information from travel sheets and odometer indicators are taken into account. In this case, you can determine the mileage during working hours. If the use of a company car for personal purposes was practiced, compensation may notpaid to the head of the company by the employee.

Conclusion

Many companies only hire employees who have a personal car, which is then used to solve work issues. In this case, the car owner can expect to receive some compensation, and its amount depends on the actual expenses that one has to face while solving work tasks using a personal car.

The amount of compensation should not exceed the norms established by law, otherwise such expenses cannot be used by the company to reduce the tax base for income tax. Often, accountants violate the rules for calculating this payment, which leads to the challenge of compensation by tax inspectors in court.