Tax on Travel reimbursement set to change
- Aug
- 31
- 2012
Proposed changes to the taxation of variable remuneration (including travel reimbursements) have been drafted for comment. Currently, where an employee receives a reimbursement for travel under-taken, this is not subject to the deduction of Employee’s Tax (PAYE) at the time of the payment (subject to certain requirements). Only upon the submission of the employee’s private tax return will the travel reimbursement (under code 3702) be subject to full normal tax, unless the employee provides for a claim based on costs/formula basis.
It is now proposed that upon actual payment of the reimbursement to the employee, the employer must withhold full PAYE from the payment – employers will no longer be able to pay travel reimbursements on a ‘tax-free basis’ which is in line with SARS’ “pay now, argue later” approach.
The proposed amendment is 1 March 2013 and all employers would need to review their internal reimbursement processes.
All material subject to our Legal Disclaimers.
