Ricochet News

Don’t be caught napping with your travel allowance claim – get your refund!

May 22, 2019
Don’t be caught napping with your travel allowance claim – get your refund!

We have recently become aware of several cases where SARS disallowed travel claims as a result of logbooks submitted by taxpayer’s containing ‘insufficient information’.

The 2019 filing season will commence on 1 July 2019 and it is important for taxpayers who received travel allowances to ensure that their 2019 logbook covering the period 1 March 2018 – 28 February 2019 is valid in order to meet all of SARS’ requirements.

There are essentially two types of travel allowances employers can offer their employees, namely –

  1. allowances or advances with regards to general business-related transport expenses; and
  2. allowances or advances to be used by a taxpayer to pay for expenses in relation to a vehicle used by the taxpayer for business purposes.

This brief article will focus on allowances or advances used to pay for vehicle expenses (option b. above).

Employers are required to withhold PAYE on 80% of a travel allowance paid over to an employee each month (where employers are satisfied that at least 80% of the travel allowance will be used for business purposes, PAYE may be withheld on a reduced portion of 20% of the travel allowance).

Any amount of a travel allowance that a taxpayer does not actually expend for business purposes (i.e. private expenses – this importantly includes travel between an employee’s residence and their place of employment) will form part of their taxable income on assessment.

Claiming a deduction against travel allowance

To claim a deduction against a travel allowance, a taxpayer is required to put forward a claim for business travel costs when submitting their income tax return. There are two ways a taxpayer can determine business travel costs, namely –

  1. by using actual figures/expenses incurred; or
  2. by using actual business kilometres travelled and applying a deemed cost per kilometre (fixed by SARS annually in a Government Gazette – currently 361 cents per kilometre).

In either case, SARS require an accurate logbook that records all business travel undertaken during the year of assessment. It is commonplace for SARS to disallow logbooks that do not meet SARS’ minimum criteria.

Accordingly, it is important that taxpayers ensure that their logbooks contain the following information to be accepted by SARS (at a minimum):

  1. date of each trip;
  2. opening and closing odometer reading per business trip;
  3. total business kilometres travelled per business trip (i.e. the difference between the opening and closing odometer reading);
  4. destination travelled to and from per business trip;
  5. the reason for the business trip; and
  6. details of any actual business expenses per business trip (i.e. fuel, oil, repairs and maintenance).

In this regard, SARS provide a comprehensive E-Log book on their website (www.sars.gov.za/TaxTypes/PIT/Pages/Travel-e-log-book.aspx).

Because often only 80% of a travel allowance is subject to PAYE, if a taxpayer does not submit a travel claim to SARS for business travel on assessment, 20% of the travel allowance is effectively “unspent”. Such unspent portion of the travel allowance received will be taxable on assessment, and the amount that you pay in each year in this case would be the tax on the 20% of the allowance that had not been taxed during the year.

It is therefore important that a taxpayer who receives a travel allowance keep an accurate logbook detailing business travel accurately along with actual costs incurred to claim as much business expenditure against the travel allowance received as possible.

Please forward any queries you may have in this regard to Mazars Port Elizabeth at taxpe@mazars.co.za.

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