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Don't make the same business travel claim mistakes as the IRS in the US

by , 30 May 2013
The Internal Revenue Service or IRS in the US is the country's regulatory tax body, much like SARS is in South Africa. But even tax bodies make mistakes... News reports show that some IRS employees have been misusing their travel credit cards. Here's how to make sure you stay out of SARS' auditing radar by keeping your company's business travel claims up to scratch.

A watchdog in the US has announced that the Internal Revenue Service must be tougher on employees who abuse their government-paid travel cards, says Reuters.
The misuse includes using the government-issued credit cards to pay for personal expenses instead of travel and making purchases from unauthorised merchants.
And your business could face the wrath of SARS for making similar 'travel expense' errors. 
That's why you need to make sure your business awards, taxes and records employee travel allowances correctly, says FSPBusiness.
If not, your business will face an audit and penalties for non-compliance. 
For SARS to accept your business travel claim, you must use the services of a registered Vat vendor…
For example, if your employee's travelling on business and staying overnight, you can claim back the input tax charged on this business travel accommodation… but only if the guesthouse or bed and breakfast they stay at is a registered Vat vendor, says the Practical Vat Loose Leaf Service.
But as with any refund claim you submit to SARS, remember that you need to supply SARS with proof of the expense.
Here's how to handle business travel tax receipts for SARS to refund you the Vat portion
This means that your employee will have to keep all tax receipts with a Vat portion and hand them over to your accountant, so that they're filed away for the relevant tax year (but keep them for at least five years, in case of an audit).
This way, you'll be sure they're submitted with the correct Vat return.
If you don't take this step, SARS will disallow the refund claim and automatically put you under its radar for a tax business to see if you've made other 'dodgy' claims that you can't prove, says FSPBusiness.

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