Are the km's travelling to the office constituted business km's or not when your salary package is 100% commission based? I have a client that's salary package is 100% commission based. The client is however travelling everyday to the office where he perf
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
You mention that it is ‘100% commission based’ and we accept that the individual is not in a receipt of an allowance. The principle however, apart from the fact that the adjustment is now made under section 23(g) (or 23(a)) of the Income Tax Act.
The current practice generally prevailing with regard to private travel is as follows:
“In this regard, section 8(1)(b)(i) provides that travelling between a recipient’s place of residence and place of employment or business is private travel. The location of a recipient’s place of employment or place of business is a factual enquiry. In relation to an employee’s place of employment, it is the place at which the employee must render services as agreed with the employer. The term “place of employment” applies when the recipient of the allowance or advance is an employee and the term “place of business” applies when the recipient is a holder of an office.
Travel between the place of employment or business and the place of residence is regarded as private travel even if the travel takes place after normal or during extended working hours.”
Note, the words in section 8(1)(b)(i) were recently amended and now refers to “travelling between his or her place of residence and his or her place of employment or business or any other travelling done for his or her private or domestic purposes”.
The issue is therefore whether the home office (or place of residence) is his place of employment. This is a factual inquiry and the fact that the employment contract specifically deals with this is not, on its own, sufficient. SARS provides as an example, the instance where “a computer programmer, who is allowed to work from home on a permanent basis (that is, the home office is the place of employment) travels to a client’s premises to discuss system requirements and functionality, the travel from the home office to the clients’ premises.” A further example provided by SARS is where “an assistant who is employed to work as a shop assistant at a V&A Waterfront store in Cape Town for two days a week and the Canal Walk Store in Cape Town for three days a week … travels from home to a store, the travel between home and the Canal Walk Store, or the V&A Waterfront store as appropriate.”