Travel Allowances

Travel Allowances

Payroll / eTorQue, Tax

Over the past few months, it has come to light that the SARS special audit division have been doing checks on the tax certificates of some major companies dating back five years, specifically targeting the Travel Allowances as recorded on these certificates. Currently only major corporates have been looked at, but a number of tax practitioners who have been involved with their clients regarding this have stated that due to the success of this audit so far, SARS will be checking all certificates for the same issues. In the first three months of the audit they able to recover over R 2.5 million in taxes.

The following must be taken into account to ensure that your Travel Allowances are correct:

  • Only employees who are required to travel for work, using their own vehicles, are entitled to a travel allowance that is taxed with the 80/20% rule.
  • Always use the SARS table for fixed and fuel costs when determining the value of the travel allowance.
  • Employees who have a travel allowance must keep a detailed log book of all their business and private travel.
  • The allowance can be in the form of a cash amount paid upfront or a petrol or fleet card (must be recorded).
  • Cash allowances and petrol/fleet card amounts must be recorded through the payroll.
  • Cash allowances and petrol/fleet cards are reported against tax certificate code 3701 – Travel allowance.
  • Re-imbursive travel allowances are when the employee puts in a physical claim per kilometre.
  • Re-imbursive claims must be recorded in payroll.
  • Re-imbursive claims that:
    • Do not exceed 8 000 km in a tax year; and
    • Do not exceed the SARS rate per kilometre (currently R3.30); and
    • Are not paid where a cash travel allowance or petrol/fleet card is given,
    • are to be recorded against tax certificate code 3703 – Re-imbursive travel non-taxable.
  • Re-imbursive claims that:
    • Do exceed 8 000 km in the tax year; or
    • Are paid above the SARS rate per kilometre; and
    • Are paid with a cash travel allowance or petrol/fleet card,
    • Are paid in conjunction with a standard travel allowance or petrol/fleet card,
    • are to be recorded against tax certificate code 3702 – Re-imbursive travel taxable.

Please note: Re-imbursive travel allowances are not taxed through payroll at any time. These will be taxed on assessment.