News FlashesJuly 26, 2022Are you claiming the correct rate for business kilometres travelled?

With the tax filing season now open until 24 October 2022 for non-provisional taxpayers and until 23 January 2023 for provisional taxpayers, some taxpayers are still not certain how the reimbursement for business kilometres travelled is determined.

Any allowance paid or advance given to an employee in respect of travelling expenses for business purposes is referred to as a travel allowance.

Fundamentally, the legislative framework makes provision for two scenarios:

  • A travel allowance given to an employee to finance transport, which in the ordinary course would be a set rate or amount per pay period;
  • A reimbursement given to an employee based on actual business travel.

The above are taxed differently, and it is therefore imperative to know the difference.

Each year after the budget speech has been delivered, a Government Gazette is published with the updated rate per kilometre for motor vehicles.

Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the following table (as published in Government Gazette No. 46015 of  8 March 2022):

The simplified method makes use of a fixed rate per kilometre where no other allowance or advance and no other compensation in the form of a further allowance or reimbursement (other than for parking or toll fees) is paid by the employer to the employee.

This prescribed rate is also known as the AA rate per kilometre and is R4.18 for the 2022-2023 tax year. Reimbursive travel cost at the prescribed rate is non-taxable. However, where the reimbursed rate exceeds the prescribed rate of R4.18 per kilometre, irrespective of the business kilometres travelled, there is an inclusion in remuneration for PAYE purposes. The full inclusion amount is subject to PAYE, unlike the fixed travel allowance where only 80% of the amount is subject to PAYE.

Contact our legislation team at info@crs.co.za if you require any additional information. 

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