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Travel allowance options and tax codes for employees.

- Any type of benefit (or at least the unexpended portion of it), is taxable in the hands of an employee.. which includes any form of transport benefit.
- Regarding transport for your employees for business purposes, are there two options...
providing a Company Car or paying a Travel Allowance
- If your employee holds an important position in the business, and does a lot of traveling for business, is the Company Car the more cost and tax effective option. Alternatively, is the Travel Allowance the more flexible option.

With the requirement effective Marí2010 that a logbook must be kept of business travel to claim against your Travel Allowance the Allowable Deduction at Assessment, has SARS effectively closed the opportunity of claiming unrecorded business kmís. Although little else has changed, has it given rise for time to reflect...

TYPES OF TRAVEL ALLOWANCES, AND WHICH ONE TO USE ?
Please note: Travelling Allowance options and tax codes have changed with effect from Mar'2018
Having unravalled the various conditions and tax codes that SARS has conjured up, we thought to lay it out in a table .....

TRAVEL ALLOWANCE OPTIONS & TAX CODES. Eff: Mar'2018
Compensative only Reimbursive only Compensative and Reimbursive
Reimbursive Rate does not exceed Prescribed Rate
+ PAYE at 80% or 20% of Travel Allowance
+ Tax Code 3701
+ PAYE at 0% of Travel Allowance
+ Tax Code 3703
Compensative part
+ PAYE at 80% or 20% of Travel Allowance
+ Tax Code 3701

Reimbursive part
+ PAYE at 0% of Travel Allowance
+ Tax Code 3702
Reimbursive Rate does exceed Prescribed Rate
+ PAYE at 80% or 20% of Travel Allowance
+ Tax Code 3701
- Reimbursive portion at less than Prescribed Rate
+ PAYE at 0% of Travel Allowance
+Tax Code 3702

- Reimbursive portion at more than Prescribed Rate
+ PAYE at 100% of Travel Allowance
+Tax Code 3722
Compensative part
+ PAYE at 80% or 20% of Travel Allowance
+ Tax Code 3701

Reimbursive part
- Reimbursive portion at less than Prescribed Rate
+ PAYE at 0% of Travel Allowance
+ Tax Code 3702

- Reimbursive portion at more than Prescribed Rate
+ PAYE at 100% of Travel Allowance
+ Tax Code 3722

And if that makes sense, the we have succeeded in our quest to clarify things a bit.

Be aware, in order to claim a Travel Allowance as an Allowable Deduction at Assessment, must...
+ at least that amount have been paid as a Travel Allowance by the Employer, and assigned to the appropriate Tax Code.
+ a logbook be kept by the Employee giving details of business trips

WHAT AMOUNT OR RATE / KM TO PAY ?

- Determining the amount that should be paid as a Travel Allowance, being compensation to an employee for using his own vehicle for business purposes, can be quite a daunting task...
- It is obviously not acceptable for the employee to be compensated less than his/her true costs, which is further aggrevated by the fact that less of an Allowable Deduction at Assessment can be claimed. Compensating an employee much more than his true costs will certainly be frowned upon by SARS. So, the best is to compensate an employee for true costs, and if going to err, better slightly on the high rather than low side
- As a guideline, may the Rate/km or Rate/month per our Webpage 'SARS Motor Vehicle Costs Determined Rate Calc' be used, which if nothing else will be in line with what SARS allows as the Expended Portion.

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