The controversial E-Toll system is not only hogging the media headlines but also causing a headache for employers. We have been approached by many employers wanting to know the impact of E-Toll expenses on the company car fringe benefit and travel allowances.
There are three scenarios that need to be considered when evaluating this matter. The first of these is where an employee is reimbursed at the prescribed SARS rate for business travel. Whilst current tax legislation does not address this issue it is believed that an employee may be reimbursed for any E-Toll expenses without any adverse tax consequences.
The second scenario involves those employees who are allocated a fixed travel allowance to cover business-related travel. Employees will need to decide whether they want to claim the actual expenses incurred whilst undertaking business travel (now including E-Toll expenses) or use the travel costs as per the annually published SARS travel table.
The last scenario involves the use of a company car. The employer will be responsible for the payment of any E-Toll expenses and will be able to claim these expenses as a deduction for Income Tax purposes. The employee will continue to pay fringe benefit tax on the use of the company vehicle.
It is anticipated that SARS will publish guidelines in this regard in the near future. As soon as such guidelines are available they will be summarised and feedback provided. Should you have any questions in this regard kindly contact Dave Beattie on either 031 582 7410 or [email protected].