Two types of travel allowances you need to know about

43984, 27 Aug. 2014

Tags: reimbursive travel allowance, allowances for business travel, travel allowance

Travel allowances are one of the most common triggers for a SARS audit.
Often, employers fail to award and record their employee’s travel allowances correctly. When this happens, SARS picks up the errors and audits you. And this means only one thing: Harsh penalties.
In fact, you might have to pay a 10% penalty for under deducting Pay As You Earn (PAYE) and SARS could find you guilty of tax evasion.
Luckily, there’s a way to stop this from happening to you.
It all starts with understanding the two types of travel allowances. Knowing the different types will bring you a step closer to awarding these allowances correctly and getting the tax treatment right too.
What’s a travel allowance?
A travel allowance is the sum of money you give to your employee regularly, such as every month, to cover his business travel costs, for example, driving to and from client meetings.
Now let’s look at the two types of travel allowances…
Every employer needs to know about these two types of travel allowances
#1: Allowances or advances for business travel
This allowance covers all of the expenses your employee incurs while travelling on business. For example, the costs your employee incurs when travelling to different factories or branches.
You’ll give your employees a travel allowance if it’s a fixed amount per month and it’s structured into his salary.
#2: Reimbursive travel allowance
You’ll base this allowance on the actual distance your employee travels for business purposes and you’ll pay it after your employee has done the travelling.
You’ll give your employee a reimbursive travel allowance if you refund him for his travel at the end of each month based on business travel per his logbook.
There you have it: Knowing the two types of travel allowances will bring you a step closer to awarding them correctly and getting the tax treatment right.

Related articles:




RSS Facebook Share the experience
Accounting and Tax

  • Accounting
  • Allowances and deductions
  • Audit/Assessment
  • Capital gains tax
  • Dividends
  • Donations Tax
  • Exports and imports
  • Fringe benefits
  • Input tax
  • Provisional tax
  • Sars
  • Tax basics
  • Tax invoices
  • Tax returns
  • Vat basics
  • Vat registrations
  • Vat return
Premium Services
  • Company Registration
  • Objections
  • PAYE
  • Trusts
  • Turnover Tax
  • UIF
  • Wear and Tear
how to get my tax number online[read more]
Published on 16 Feb. 2018 1 answer
Need some help on correcting payslips taken over from outsourced payroll person. As soon as the company pays ANYTHING...[read more]
Published on 06 Feb. 2018 1 answer
Dear Sir, Please advise the CGT calculation in the following scenario: Close corporation with one member purchased...[read more]
Published on 18 Jan. 2018 1 answer
Video Archive Video club

Your library of Free eReports
View full library
SARS Tax Tables 2016/2017 Download

Simply click download for your FREE SARS Tax Tables 2016/2017 to ensure you calculate your tax correctly.