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Three travel allowance rules that'll help you and your employee avoid penalties

by , 16 September 2014
Employers often get travel allowances very wrong. And SARS knows this, in fact, it will happily charge you or your employee penalties if anything is amiss with the travel allowance.

Don't let this happen to you! To keep SARS happy, follow these three travel allowance rules so you don't run into any problems...

 

Follow these three travel allowance rules so you can stay out of trouble with SARS

 
Rules #1: Ensure your employee always keeps an accurate logbook
Your employee must keep an accurate logbook. You must check it regularly to ensure he has the right information in it. If it doesn't, it leaves him, and you, vulnerable to penalties. 
 
The logbook must detail:
 
1. Date of travelling;
2. Opening kilometres;
3. Closing kilometres;
4. Total kilometres;
5. Private kilometres;
6. Business kilometres;
7. Business travel details (where, reason for visit, etc.);
8. Actual fuel cost and oil cost; and
9. Actual repairs and maintenance cost.
 
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Get 69 solutions to the most challenging company car and travel allowance questions
 
If you don't know the answers to questions like:
 
- How often your employees should hand in their logbooks?
- If you're required to pay Vat on a company car your employee wants to buy?
- How to calculate travel allowances correctly to avoid being head hunted by SARS?
- If you can claim input tax on a vehicle you use for company purposes?
You're not only wasting unnecessary hours of time, but could also be making mistakes that SARS will hunt you down for.
 
 
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Rule #2: Use the correct SARS formula to work out the tax on the allowance
 
SARS has a formula of all the rates you must use [link]. You need to apply this correctly to the number of kilometres your employee drives. You also need to use the correct rates for his fuel and maintenance costs.
 
Rule #3: Remember to treat the remaining allowance correctly
 
If your employee doesn't use all his travel allowance money in a certain month, the remaining money becomes part of his taxable income.
 
You must use his logbook to check these records and see how much your employee used from his travel allowance. 
 
By following these three rules correctly you can keep SARS happy and avoid any nasty penalties.

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

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