By Wilmarie Brits
A travel allowance is an allowance granted by your employer to you, for the use of your private motor vehicle for business purposes. A fixed travel allowances and/or a petrol, garage and maintenance card will be granted only to employees who are required to do substantial business travel as part of their work.
A reimbursive travel allowance, on the other hand, is paid to employees who have to travel for business purposes using their personal vehicles but who don’t have a company petrol card. They can submit claims for the cost of the actual distances they have travelled to the company for reimbursement at a fixed rate per kilometre.
Here is what you need to about the employees’ tax (PAYE) and income tax consequences of these two allowances:
According to Sumeshan Nair, executive committee member at the South African Payroll Association (SAPA), travel allowances are reported against the IRP5 code 3701. Your employer may tax a certain portion of the travel allowance they pay to you. “Most employers choose to tax 80% of the travel allowance paid to employees as a precaution and in the best interests of both the company and the employee,” said Nair.
If you want to claim travel allowance deductions from SARS, you must meet certain requirements. For example, you must maintain a log book in order to effectively track the total distances you travel for business and personal reasons. You must also keep proof of your travel expenses. “If you do not have an updated log book you will not be able to claim any deductions, which can result in you being required to pay in to SARS on your assessment,” said Nair.
You are allowed to claim for wear and tear on your vehicle, maintenance and repairs, vehicle licence costs, insurance costs and finance charges. However, travelling between your home and work is regarded as private travel, which means you cannot claim such travel expenses from SARS.
Reimbursive travel is reported against IRP5 code 3703. According to PKF, no PAYE is payable on a reimbursive travel allowance paid by an employer to an employee up to the rate of 361 cents per kilometre, regardless of the value of the vehicle. You also don’t have to keep a log book.
You should however keep in mind that when your reimbursed portion exceeds 361 cents per litre it is subject to PAYE just like a fixed travel allowance.
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