A travel allowance needs to be calculated for an employee who travels extensively. Please advise on the following: 1. What % of your salary is acceptable as a travel allowance? 2. Can a travel allowance be more than 30% of your package? We have taken the
Author: The Payroll Authors Group of South Africa
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
There is no official percentage of the package prescribed as acceptable for a travel allowance. However, in general where the total percentage exceeds 25%, SARS would normally conduct an audit and the employee must have proof available in order to satisfy that he travel extensively for business purposes. Furthermore, the travel allowance must at least be of such a value that it covers the business travel costs. This means that if you give the employee a R10000 travel allowance but the total business costs (total business costs ÷ total km travelled x business km travelled) is less than the travel allowance, such employee might find that he has a debit when his final tax assessment is processed.