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.
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.