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How to make sure your travel allowances stand up to SARS' scrutiny

by , 23 February 2017
Travel expense claims and deductions are one of the most common triggers for a SARS audit.

Especially for travel allowances. SARS differentiates between a Travel Allowance and a Reimbursive Travel Allowance.

If you don't award, tax, and record your staff's travel allowances correctly SARS will pick up the errors and audit you.

You might have to pay a 10% penalty for under-deducting PAYE. Plus, SARS could find you guilty of tax evasion - and that carries a penalty of up to 200%!

Let's have a look at when you should you give the employee a Travel Allowance vs. a Travel Reimbursement Allowance...

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When should you give the employee a Travel Allowance vs. a Travel Reimbursement Allowance?
 
Travel Allowance
 
This is when you give the employee a fixed amount each month as part of his remuneration package, towards his monthly business travel. But it's awarded regardless of how many business kilometres he actually travelled.
 
It's ideal for employees who travel for business on a daily or weekly basis, e.g. a medical rep.
But how much do you pay your employee?
 
There's no set figure you must use. SARS leaves it up to you to estimate the number of business kilometres your employee is likely to travel, and then award him an allowance that's in line with this and based on the value of the employees car.
 
But be careful, your estimate could get you into trouble with SARS. In chapter T09: How to tax Travel Allowances in your
Practical Tax Handbook, you'll see exactly how to pay and tax your employee without triggering SARS' alarm bells. If you don't have a copy of the loose leaf, you can get one now, with a 30-day review period.
 
Let's have a look at the reimbursive travel allowance now.
 
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Reimbursive travel allowance
 
This is when the employee covers the costs of his travel, but reclaims the expense from the company. This is better for employees who only occasionally travel for business reasons.
 
You can use the SARS reimbursement rate of R3.29 per kilometre for the 2017 tax year (2016 tax year: R3.18) to pay your employees.
 
Alternatively you can calculate a rate from the travel allowance table above based on the value of the employee's car.
 
In chapter T09: How to tax Travel Allowances in your
Practical Tax Handbook, you'll see exactly how to use the SARS rate per kilometre schedule to pay and tax your employees correctly. If you don't have a copy of the loose leaf, you can get one now, with a 30-day review period.
 
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