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Do this to ensure your HR grading system doesn't get you in trouble with SARS when it comes to travel allowances

by , 10 July 2014
Travel expense claims and deductions are one of the most common triggers of a SARS audit.

If you don't award, tax and record your staff's travel allowances correctly, SARS will pick up the errors and audit you.

The result?

You might have to pay a 10% penalty for under deducting PAY As You Earn (PAYE.) Plus, SARS could find you guilty of tax evasion - and that carries a 200% penalty!

Since that's risk your company can't afford to take, do the following to ensure your HR grading system doesn't get you in trouble with SARS when it comes to travel allowances.

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Travel allowances: If you want to ensure your HR grading system doesn't get you in trouble with SARS, don't use it if it's not justified

An HR grading system is where you categorise your staff according to their seniority in the company.

This means someone in the most junior category will earn a certain salary bracket and will have certain company perks and someone in the most senior category will earn a higher salary bracket and have certain other perks, explains the Practical Tax Loose Leaf Service.

In some cases, this is based on a percentage of total cost to company and, employees will get a travel allowance, regardless of whether or not they're required to travel on business.

And that's where SARS comes in.

It'll question this, especially if your employee never needs to travel for business.

So here's the solution: Avoid falsely implementing HR grading systems.

If you do have one, make sure whoever gets the travel allowance not only deserves it, but also that his employment contract states clearly that travel will be a job requirement from time to time.

This is the only way you'll escape penalties and audits when it comes to travel allowances and HR grading systems.

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