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Is your company making this common travel allowance error?

by , 30 July 2013
Travel expense claims and deductions are one of the most common triggers for a SARS audit.

If your company is making this one common travel allowance error, you can be sure SARS will pick up it.

Read on to discover the one travel allowance error you must never make so your business can avoid non-compliance penalties.

There are inherent risks when you offer travel allowances to your employees, says the Practical Tax Loose Leaf Service.

But if avoid the following error you'll reduce that risk.

Make this one travel allowance error and you'll face a 200% penalty

Travel error: Don't use HR grading systems if they're not justified!

An HR grading system is one in which you categorise your staff according to their seniority in the company.

This means an employee in the most junior category will earn a certain salary bracket and will have certain company perks. An employee in the most senior category, on the other hand, will earn a higher salary bracket and have certain other perks.

In some cases, this is based on a percentage of total cost to company. And employees will get a travel allowance, regardless that this isn't a requirement of their job.

Be warned, SARS will question this, especially if the employee never needs to travel for business.

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Is there a way of solving this travel allowance error?

Yes, the solution is to avoid falsely implementing HR grading systems. If you do have one, make sure whoever gets the travel allowance not only deserves it but also his employment contract must clearly state that travel is a job requirement from time to time.

Avoid this common travel allowance error to ensure your business doesn't face non-compliance fines.

Do you want 14 practical examples to do your travel calculations in minutes?
Spending time trying to calculate all the variables of company cars vs. travel allowances can be frustrating not to mention complicated.

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The Practical Tax Loose Leaf shows you exactly how to calculate the various travel options available to you. With this information at the ready, you'll never make a wrong decision about company cars and travel allowances again. And the best part is, you'll save a fortune in taxes that you would've had to pay if you didn't have this information.

Simply use the 14 examples we've laid out for you. All you need to do is substitute our figures with yours and voila, you'll have your calculations done within minutes.

But if you're still not sure you have your calculations right, or if you've used the right information, refer to the Practical Tax Loose Leaf here.

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