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Taxing your employee's Reimbursive Travel Allowance? Here's how to do it correctly

by , 08 September 2014
If you give your employee a reimbursive travel allowance, it means you'll pay him pay for his travel expenses after his trip. This is different from an advance allowance where you structure the amount into his monthly salary.

A reimbursive allowance has its own rules when it comes to tax. If you get it wrong or confuse it with an advance travel allowance, it'll result in SARS penalties.

Don't worry though. You can avoid this. All you have to do is keep reading and find out how to tax this type of allowance correctly...

 

Here's how to calculate a reimbursive travel allowance

 
A reimbursive travel allowance is when your employee covers the costs of his travel, but reclaims the expense back from your company. This is better for employees who only occasionally travel for business reasons.
 
If you give your employee a reimbursive travel allowance, and no other type of travel allowance, use the SARS rate for the 2015 tax year of R3.30 per km or determine the rate based on the value of the employee's car. You can check out the Practical Tax Loose Leaf Service on how to do this.
 
So let's say you use the SARS 2015 rate. You take the distance your employee traveled in kilometers and times that by the reimbursive rate. This is what you pay your employee back.
 
But then how do you treat this money in terms of your employee's tax?
 
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Here's how to treat the reimbursive travel allowance when it comes to your employee's tax

 
Reimbursive travel allowances aren't subject to PAYE. You'll exclude this allowance when you calculate your employee's monthly PAYE deduction. 
 
So remember that your employee doesn't pay any extra tax on this type of travel allowance or you overtax him.


PS. Find out how to save R26 983 by keeping an accurate logbook

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