This article is based on tax law effective from 1 March 2020..
Where an allowance or advance is based on the actual distance travelled by the employee for business purposes, employees’ tax will not be withheld on the allowance paid by an employer to an employee if the rate does not exceed 398 (previously 361) cents per kilometre, regardless of the value of the vehicle.
The portion by which the allowance paid by the employer exceeds 398 (previously 361) cents per kilometre will form part of the balance of remuneration calculation for employees’ tax purposes.
Where a travel allowance is paid in addition to a reimbursive allowance both amounts will be combined on assessment and treated as a single travel allowance.
With effect from 1 March 2020 both a travel allowance and reimbursive travel allowance are included in the definition of variable remuneration. This means that the allowance only accrues to the employee when it is paid. The distance travelled for business purposes will also be deemed to be travelled in such a year of assessment.
Access commentary and an in-depth technical summary on our on-demand webinar presented by Prof Jackie Arendse here.