A travel allowance, if any was paid, had to be reported against irp5 source code 3701. Travelling and car allowance 11 illegal use of the word sars 61 reimbursive travel allowance 11 request for relevant material 61 subsistence allowance 11 persons who may be interviewed 62. These combined allowances will be treated as a taxable travel allowance. Where a travel allowance is paid in addition to a reimbursive allowance see discussion below or vice versa, both the amounts will be combined on assessment by sars. I think that the 10km should be ignored from the calculation and therefore should still remain on code 3702. There are essentially two types of travel allowances that employers can offer.
Taxpayers who receive a travel allowance are allowed to claim a deduction for the use of their private vehicle for business purposes. Calculate your claim based on the cost scale table which sars supplies youll find this table in the introduction section to the travel elogbook. Travel allowances and reimbursements september 2014 issue 180. The rate per kilometer for reimbursive travel allowances has increased to 398 cents. Reimbursive travel allowances how do i process reimbursive. Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the table published on this website under legal counsel secondary legislation income tax notices fixing of rate per kilometre in respect of motor vehicles. Many payroll professionals, however, struggle to come to grips with the south african revenue service s sars travel allowance system. No wearandtear allowance can be claimed when the deemed cost calculation is used more below. The rate per kilometer for reimbursive travel allowances has increased to 398. Compare actual costs and deemed costs for the maximum tax deduction. During the year, employees tax paye is calculated on 80% of the travel allowance. Where the employer is satisfied that at least 80% of the use of the motor vehicle for a year of assessment will be for business purposes, then only 20% of the allowance is subject to the deduction of employees tax with effect from the 1 march 2011.
Oct 15, 2012 in respect of travel allowances, the draft interpretation note gives examples of what constitutes business travel and private travel for purposes of the deduction for business travel expenses, and states that the location of a recipients place of employment or place of business is a factual enquiry. Paye calculator how to calculate paye dirmeik consulting. Best bet most relevant search result site page pdf document. The rate per kilometer for reimbursive travel allowances has.
Sars travel allowances for the 2015 tax year kariba payroll. Travel costs can be claimed back at the end of the tax year as per sars schedule but is limited to the travel allowance amount per annum. If travel that exceeded this distance was reimbursed at a per kilometer rate higher than that prescribed by sars,kor other travel allowance was. Travel allowance r5,000 commission r500 pension fund r1,000. If you have received a travel allowance it is important to remember that you must have a detailed logbook in the format required by sars to justify any travel deduction claim. The employee should then claim a travel deduction on their personal income tax return. Jul 25, 2017 when trying to understand the applicable law, most tax practitioners and sars officials prefer to just use the sars guides and established practices, as opposed to trying to wrap their heads around the double whammy of double negative phrases found in the legislation that explain the travel allowance. Jun 29, 2019 reporting travel allowance and reimbursements correctly to sars is crucial as it could have a negative impact on employees and result in employees having to pay into sars on assessment, said nair. The allowance for meals and incidental costs within south africa has changed from r435. How to calculate your travel allowance when submitting tax.
The value of the travel allowance must closely approximate the actual business travel expense and should not be a chosen percentage of your salary. If travel exceeded this distance was reimbursed at a per kilometer rate higher than that prescribed by sars, or other travel allowance was paid, the total amount needed to be reflected under code 3702. Jun 30, 2019 a travel allowance is given to employees who travel for business purposes, and it is granted to finance a portion of an employees transport costs. Yourtax the online tax calculator and car allowance. Changes to reimbursive travel expenses from 1 march 2018 26 feb 2018. Because only 80percent of a travel allowance is subject to paye, if a taxpayer does not submit a travel claim to sars for business travel, 20percent of the travel allowance is effectively viewed. I have found this website za which can work out your travel allowance claim, based on your cars cost and the amount of kms you do per year. What you need to know about tax and your travel allowance fin24. Its a question that regularly plagues both employers and employees. Mar 29, 2019 fixed and reimbursive travel allowances 29 mar 2019.
You may only claim travel expenses if you kept a valid vehicle logbook. Travel allowance to be structured into your salary. Our travel allowance and company car company calculator provides you with the only complete tool in the market that calculates multiple scenarios and incorporates the latest changes to income tax law and sars practice. Sars lifts tax return threshold from r350 000 to r500 000. Sars often disallows logbooks that do not meet its minimum criteria. Step 1 is to calculate the value of the car used at the time of purchase not the current market value use the purchase agreement for this and remember to include extras, vat and the initiation costs but exclude any finance charges. Reimbursive travel allowance effective from 1 march 2018. To simplify the calculation and administration of employees tax, the definition of remuneration includes 100% of the portion of the reimbursive travel allowance that exceeds the prescribed rate per kilometre rate per kilometre for the simplified method, fixed by the minister of finance by notice in the gazette, and is subject to paye, uif and. Sars travel allowances 2015 an allowance paid to an employee in respect of travelling expenses for business purposes, subjected to employees tax of 80%.
Travel elog book sars logbook used to claim a deduction on personaltax. How the travel allowance could go wrong sars code 3701 a fixed travel allowance could go wrong when the fixed amount received by an employee is either too high or too low. Travel claims can be split into the following categories. In light of new sars requirements for travel reimbursements, it needs to be carefully revisited, says jerry botha, master reward specialist and executive committee member of the south african reward association sara. A simple step by step approach for calculating paye. The minimum information which you need to submit to sars is the date of travel, the from and to destinations, the reason for your travel, and the number. Again, sars may dismiss the entire claim when a discrepancy is found here on grounds that accurate records were not maintained.
With approximately one in three returns being verified by sars there is a high possibility that you will be required to submit this logbook to sars for scrutiny. When trying to understand the applicable law, most tax practitioners and sars officials prefer to just use the sars guides and established practices, as opposed to trying to wrap their heads around the double whammy of double negative phrases found in the legislation that explain the travel allowance. A subsistence allowance is where an employer may pay an employee a daily allowance for accommodation and meals during a period while the employee is out of town on business. A travel allowance is any sum paid, or advance granted, by the employer to the. How to manually calculate your travel claim or structure a travel allowance below is an extract from the sars tax tables for tax year 2019. Employers may elect to reimburse employees for the travel costs at a set rate per kilometre, as opposed to a. Calculate your claim based on the cost scale table which sars supplies youll find this table in the introduction section to the travel elogbook calculate your claim based on actual costs. If travel exceeded this distance and the employee was reimbursed at a perkilometre rate higher than that prescribed by sars, or another travel allowance was paid, the total amount had to be. Before march 2019, the sage 300 people application systems made provision to include 100% of the travel allowance or use of company car fringe benefit value in remuneration where employees only used the allowance company car to travel for private purposes. Company car vs travel allowance heres what wins out. I receive a travel allowance or taxable reimbursive allowance.
This is as sars allows a certain rate per km based on the value of the car and the total number of km travelled. Issue 3 includes commentary and examples of the calculation of the deduction from subsistence allowances, as well as a new section dealing with travel allowances. Sars clarifies fringe benefits and allowances tax south. The sars schedule uses the value of the vehicle to determine a deemed expenditure but if a comprehensive record of expenses is maintained and presented, this can be used to claim back tax at the end of the. I am an independent contractor commission earner source code 3606 3616 is on my irp5it3a.
What you need to know about travel allowance in south africa. Jun 07, 2016 please advise what the fixed cost is, and how i can calculate what tax rebate i should expect to receive from sars in july. Which sars paye code will the reimbursive travel allowance. Reimbursive travel allowance taxable code 3702 and 3722. Company car vs travel allowance heres what wins out with.
Sars will require detailed records in the form of logbooks as supporting. Where the recipient is obliged to spend at least one night away from his or her usual place of residence on business and the accommodation to which that allowance or advance relates is in the republic of south africa and the allowance or advance is granted to pay for. What you need to know about tax and your travel allowance. Fringe benefits tax fbt general overview scope of what is covered in uts taxation law duration. Travel elog book sars logbook used to claim a deduction. This combined amount will be treated as a taxable travel allowance. Does anyone know how sars does the calculation which determines whether you get money out after your claim, or whether you pay in. Fourthly, calculate your total kilometres for the full year closing. I run my own business am a sole proprietor freelancer. Useful to sales representatives for logging trips to and from a certain customer, as well as submitting detailed travel claim forms to. The new rules are simpler and more logical than before, resulting in a travel compensation option that has. To do this, youll have to keep an accurate record of all your expenses during the year, in addition to keeping a log book. Online income tax calculator for the 2017 tax year.
For the 20192020 tax year, the reimbursive allowance rate is r3. In my experience i have seen cases where people have travel allowances of r100 000 but. How to tax a travel allowance paymaster people solutions. The online tax calculator and car allowance calculator for the south african salary and wage earner.
If the employer also pays a fixed travel allowance, this is declared separately with code 3701 as usual. Code 3703 is to be used for a nontaxable reimbursive travel allowance it is a reimbursement for business kilometres not exceeding 8 000 kilometres per tax year and at a rate which does not exceed the prescribed rate per kilometre. A travel allowance is an allowance or advancement given by your employer for business travel required by the employee for employment purpose of using your motor vehicle. Travel allowances and logbooks must be accurate iol. Employers may elect to reimburse employees for the travel costs at a set rate per kilometre, as opposed to a fixed monthly travel allowance. On the deemed cost method if you do not claim at least 20% of your travel allowance which means r20 000 on a r100 000 travel allowance a taxpayer will have to pay in on their tax return. Please advise what the fixed cost is, and how i can calculate what tax rebate i should expect to receive from sars in july. Step 1 is to calculate the value of the car used at the time of purchase not the current market value use the purchase agreement for this and remember to include extras, vat and the initiation costs but. Mar 04, 2019 travel claims can be split into the following categories. Apr 20, 2018 if travel that exceeded this distance was reimbursed at a per kilometer rate higher than that prescribed by sars,kor other travel allowance was paid, the total amount needed to be reflected under. Travel elog book sars logbook used to claim a deduction on. Sars travel allowances 2014 an allowance paid to an employee in respect of travelling expenses for business purposes, subjected to employees tax of 80%. Botha is referring to the removal of the 12,000 km limit that was previously applied to reimbursements.
Fixed and reimbursive travel allowances 29 mar 2019. Travelling and car allowance 11 illegal use of the word sars 61 reimbursive travel allowance 11 request for relevant material 61. It pays to travel the sa institute of tax professionals. I receive a travel allowance or taxable reimbursive allowance source code 3701 3702 is on my irp5it3a. How to calculate your travel allowance when submitting tax click here. In all other instances, the reimbursive travel amounts had to be reflected against irp5 source code 3703. If an employer does the calculation correctly, they will see that a company vehicle is the best reward strategy in this case.
It is important to note that the subsistence allowance is only a guideline provided by sars and is not legislated. A travel allowance is granted to employees who travel for business. Yes, purely from a sars refund perspective, the travel allowance. The travel deduction calculation hrtorque outsourcing. Whats new an introduction to differences in tax on the same salary. View what your tax saving or liability will be in the 20182019 tax year. Find out how much you get back from your travel claims. The rate per kilometre used to calculate the travel reimbursement exceeds the prescribed rate per kilometre. A travel allowance is given to employees who travel for business purposes, and it is granted to finance a portion of an employees transport costs. A travel allowance is an allowance granted by the employer to the. Most employers are aware that a travel allowance may be granted to an employee where it is anticipated that the employee will be required to undertake business travel by virtue of the duties of hisher employment and that a travel allowance should not be merely used as a mechanism to reduce an employees. In my experience i have seen cases where people have travel allowances of r100 000 but the value of their car is lower than r40 000.
The employee carries the cost of fuel, insurance, and maintenance. Let tim submit your tax return direct to sars in just a few clicks. Other compensation is paid to the employee for business travel in the form of a travel allowance. Understanding travel allowance and capital gains tax. Jun 01, 2015 if you have received a travel allowance it is important to remember that you must have a detailed logbook in the format required by sars to justify any travel deduction claim. Sars travel allowances for the 2014 tax year kariba payroll. The calculation of a realistic travel allowance should be done in the same way that sars will assess the allowance at the end of the tax year. Where an employee receives both a fixed travel allowance and a reimbursive allowance, the amounts will be combined on assessment by sars. But i dont know how to use that answer to calculate if ill gain or lose for a. The south african revenue service recently published four draft interpretation notes dealing with the taxation of allowances and fringe benefits. The portion that falls within sars s rate must be declared using code 3702 while the portion above that rate must be reflected under a new code, 3722.