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Ensure you're structuring these 2 travel allowance types correctly and avoid SARS penalties

by , 10 March 2016
A travel allowance is a sum of money which you regularly give to an employee, like every month or so, to cover their business travel expenses while using her own private vehicle.

Now, in order to avoid penalties from SARS and minimise the amount of tax due, you must ensure that your employees' travel allowances are structured correctly.

In other words, if you fail to properly award, tax and record all of your staff's travel allowances, SARS will audit you.

So take note of the 2 types of travel allowances which SARS permits and ensure that you are applying them correctly.

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Type#1: Fixed travel allowance

In this allowance, your employee must pay 80% of his travel allowance to PAYE.

But if you're completely sure that they use the car mostly for business purposes, then the percentage will be 20%.

Or, where they've travelled less than 8000 km in a year, no tax will be payable on the reimbursement you pay back to them.

IMPORTANT: Ensure that your employees keep a logbook

In order to claim a travel allowance, your employees must have a valid logbook with the following details:

·         The date of travel;

·         To-and-from details;

·         Reason for travel; and

·         The number of business kilometres travelled.

Remember to take your readings at the end of every tax year.
 
Type#2: Reimbursive travel allowance

This type of travel allowance is for employees who don't get a fixed travel allowance.

With this allowance, you'll pay an employee for the distance they travel, that's work related only, based on their travel logbook. And these amounts aren't taxable on the payroll.
 
IMPORTANT NOTE: You must calculate your travel allowances according to SARS' tables.
 
*Page over to chapter T 09 in your Practical Tax Loose Leaf Service handbook to learn more on travel allowances as how to tax them.
If you don't already have this great tax resource, click here.


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