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Don't confuse these two types of travel allowances or it'll cause problems later

by , 08 September 2014
Let's say you decide to give your reps travel allowances. They travel a lot and it'll make it easier for you and them when it comes to dealing with the expenses.

Should you reimburse them or give them an advance travel allowance?

Does it matter?

Yes! Because the tax on these two types of travel allowance is different and you have to treat them differently.

Read on to ensure you don't get them confused...


Allowance type #1. Allowances or advances for business travel

This covers all of the expenses your employee incurs while he's travelling on business. For example, the costs he'll incur while travelling to different factories or branches.
When you give your employees a travel allowance he'll get it as a fixed amount per month, structured into his salary.
The difficulty with this type of travel allowance comes in when your employee doesn't travel or travels less one month because that allowance becomes a set part of his salary and you can't remove it when he doesn't travel.
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Allowance type #2. Reimbursive travel allowance

You'll base this on the actual distance your employee travels for business purposes. You'll then pay him back after he returns from his trip as a refund for the travel expenses as per his logbook.
This is more effective if your employee only travels every now and then as opposed to when travel is a regular part of his job.
The type of travel allowance you decide on entirely depends on you and your employee. Just ensure you know exactly which one you want to go with so you can follow its specific rules.

PS. Find out how to save R26 983 by keeping an accurate logbook

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