14 Practical examples make your travel calculations in minutes
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How do I account for travel expenses to visit clients?
We charge our clients for disbursement costs (i.e. accommodation costs, travel costs, subsistence costs) including the 14 % Vat
Do I post it as income (i.e. Sale Account) or can I allocate this to the relevant expense account to offset the charges we pay?
Here's what Alan has to say
Let's say you recover the exact amount of the expense you incurred, from your client. For example, if the travel expenses amounted to R114 (R 100+ R 14 Vat), you recover R114 from your client.
You'll have to send your client a normal invoice and not a tax
invoice. If you send a tax
invoice, this will create the impression that the amount of the invoice is consideration for the supply of goods or services you've supplied. This is subject to value- added tax
. Keep reading to find out what the end of this answer is…
Travel expense allocation answer continued
If you've claimed the expense and then recover this from your client as a business expense, you'll have to reflect the amount recovered as a taxable recoupment in your tax
But you don't have to claim these expenses as allowable deductions. This way, you'll avoid the recoupment provisions of the Income Tax Act. Then set it off against the entry in the expense account.
Now you know the correct way to allocate travel expenses when you charge clients. If you want access to more questions and answers like this one, check out the Accounting and Tax Club
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