Travel allowances & employment contracts
SARS is now conducting more regular PAYE audits on employers and the risk factors in PAYE are increasing by the day. Annual legislation amendments are making the task of structuring effective packages for staff very difficult and onerous for the employer.
Your employment contract and letter of appointment must reflect which allowances are required for your staff to perform their duties. The allowances provided must also be realistic and not based on a percentage of total salary package – each staff member has different circumstances to be taken into account to calculate the correct travel allowance for that employee.
Should any allowances be removed in the future, the employment contracts and letter of appointment should be updated or amended to reflect these changes to avoid unnecessary queries by SARS on the re-structuring of employee salary packages and whether employees were initially entitled to such allowances in the past.
It is also not advisable for desk-bound employees to receive travel allowances as traveling between home and your place of business is regarded by SARS as private travel.
It is best to keep a logbook of the business mileage traveled to maximize on the allowance received during the year – it needs to include the date, odometer reading and purpose of trip/client name. Opening and closing odometer reading for each tax year must also be noted.
SARS has also provided a Free Travel logbook for all taxpayers to use to record their business mileage for their tax claim – See the following link to the SARS Travel Logbook 2008/2009 (click here).
If you receive a travel allowance don’t forget to note your mileage reading at the end of the year. We have recently heard of a number of instances where SARS has arrived unannounced at a taxpayer’s place of employment and asked to see their odometer – they also often ask taxpayers to provide service records to support any claims made.
Should you require any further information, please do not hesitate to contact us.