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Here's how to get rid of a travel allowance the legal way

by , 02 July 2014
Let's say your employee James started in your company as travelling consultant. This meant he had to travel all the time for work, so you gave him a travel allowance.

Now you've promoted James to a managing position and he doesn't need his travel allowance anymore.

But if you just get rid of his travel allowance, SARS will pick up on the change on your payroll. It'll then question if James ever actually needed the travel allowance in the first place.

Luckily there's a way you can remove the travel allowance though without triggering SARS' suspicions...

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Here's how to remove a travel allowance without making SARS suspicious

 
It's easy to make SARS suspicious if you just remove a travelling allowance or increase your employees' basic salary by the amount of the allowance. 
 
You may think SARS won't see these changes, but it will.
 
If it picks up on these sudden changes, it'll think your employee didn't need that allowance in the first place. This will lead to a SARS investigation. And if you can't prove your employee needed the allowance but now doesn't, it'll lead to penalties.
 
 
They have a suggestion to overcome this though...
 

If you want to remove a travel allowance, record it as fully taxable

 
According to the Practical Tax Loose Leaf Service, you must record the allowance as fully-taxable as part of his income. What this means is your employee still gets this money, but now it's part of his taxable income.
 
Before you do this, however, you must get your employee's consent to voluntarily over -tax him. All this means is he's agreed to the increase on his income tax and won't be able to claim any travelling expenses as a deduction.
 
So there you have it: The only way to remove your employee's travel allowance without making SARS suspicious. 
 
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