Results 1 to 5 of 5

Thread: Travel allowances - is there a limit?

  1. #1
    Junior Member
    Join Date
    May 2013
    Location
    Johannesburg
    Posts
    12
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Travel allowances - is there a limit?

    Hi
    My client travels approximately 4000 km a month (both business and private). An estimated 20% of his travel is for business. Based on this mileage and his vehicle, which is at the R480,000 threshold, we would like to structure a travel allowance of R20,000 which approximately R4000 is tax-free and R16,000 is taxable. The question is - is there a limit on the travel allowance? Especially since the bulk of it (R16,000) is taxable in any case?

  2. #2
    Silver Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    202
    Thanks
    17
    Thanked 42 Times in 36 Posts
    Hi Connie
    You will be better able to arrive at your own answer if you dispel some misunderstanding.

    Actually there is no tax-free portion. It is recommended that 80% of the allowance is subjected to PAYE, while the 20% is subjected to income tax on assessment. On assessment, a deduction is allowed against the whole allowance and I assume that you are ok with how that works.

    So in a nutshell, there is no limit as such, because the entire allowance is actually taxed, after allowing a deduction. By making the allowance very high, you would be doing the client no favours because his allowable deduction would then most likely be less than 20% of the allowance, meaning he would be a tax shortfall position.

  3. Thanks given for this post:

    dellatjie (09-Mar-16)

  4. #3
    Junior Member
    Join Date
    May 2013
    Location
    Johannesburg
    Posts
    12
    Thanks
    1
    Thanked 0 Times in 0 Posts
    Hi there

    Makes total sense - thanks for that!

    Kind regards

  5. #4
    Silver Member Christel's Avatar
    Join Date
    Feb 2012
    Location
    Port Elizabeth
    Posts
    328
    Thanks
    53
    Thanked 90 Times in 64 Posts
    If you are certain that he will travel more than 8000km in the tax year for business purposes, then you could tax only 20% of the travel, instead of the recommended 80%.
    always fear when Christel is near....

  6. #5
    New Member
    Join Date
    Mar 2017
    Location
    south africa
    Posts
    6
    Thanks
    0
    Thanked 0 Times in 0 Posts
    you must check all taxes and fees also

Similar Threads

  1. Earth Resistance Allowances
    By BlueArc in forum Electrical Contracting Industry Forum
    Replies: 3
    Last Post: 11-Dec-14, 07:30 AM
  2. Replies: 2
    Last Post: 18-Jul-14, 10:03 PM
  3. Replies: 4
    Last Post: 13-Jun-13, 01:19 PM
  4. Replies: 4
    Last Post: 19-Nov-12, 03:36 PM
  5. The sky's the limit!
    By Dave A in forum General Chat Forum
    Replies: 1
    Last Post: 08-Jan-10, 10:46 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •