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Use these two tips to ensure your employee's travel allowance doesn't turn into a tax nightmare

by , 08 July 2014
So you decided to give your employee a travel allowance. There are lots of advantages of this, especially tax ones.

Thousands of businesses use travel allowances to get a bit of cash back from SARS. But they're easier to get wrong than to get right.

Here's what you need to know to avoid your employee's travel allowance turning into a tax nightmare...

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Don't let your employee's travel allowance keep you up at night

 
A travel allowance is simply an amount of money you give your employee - in addition to his salary - to pay for his travel expenses. 
 
There are tax implications for you and, whenever there are tax implications, it's easy to make a mistake.
 
To help you avoid making these mistakes use these two tips:
 
Tip #1: The first rule for travel allowances is to keep a clear and accurate logbook.
Your employee must record all the details of his travels. His logbook must include:
 
- The date;
- His name;
- The distance travelled; and
- The amount of petrol he paid for in Rands.
 
 

Tip #2: Never simply get rid of a travel allowance

 
The deduction benefits you can get from a travel allowance can easily turn into a penalty if you ditch your employee's travel allowance because he doesn't need it any more. SARS will take this to mean he didn't need it to start with and you made claims on a false travel allowance.
 
With these two tips in mind you'll be able to manage your employee's travel allowance easily and without provoking SARS. 
 
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