SARS changes could put the brakes on travelling

2010-01-15 13:55

The South African Revenue Service (SARS) has made changes directly

related to travel allowances that could result in taxpayers slamming the brakes

on travel.

“Previously, taxpayers were using the travel allowance to their

advantage, but SARS is ready to clamp the tyres of offenders misusing travel

allowances,” PricewaterhouseCoopers tax consultant Sadiyya Mosam said in a


Previously, taxpayers were entitled to the granting of two travel

allowance benefits.

Pay As You Earn (PAYE) was withheld from 60% of the travel

allowance, giving the taxpayer additional cash flow for eight extra months

before having to pay SARS the money, if the money became due at all.

Mosam said that from March 1, SARS would change this percentage.

“Now 80% of the allowance will become subject to PAYE.

“This will significantly reduce a taxpayer’s monthly cash


The second benefit of the existing travel allowance structure was

the considered business kilometre ruling.

In terms of this rule, taxpayers had to limit their mileage

travelled to 32?000km a year.

“The first 18?000km are deemed to be for private travel, while the

remaining 14?000km are then allocated to business travel,” Mosam said. This

enabled office-based staff whose private travel exceeded 18?000km to obtain a

maximum tax benefit from their travel allowance.

They were allowed to claim a fictitious deduction, thus using and

possibly even abusing the travel allowance as a tax structuring tool.

Mosam said that from March 1 SARS would repeal the deemed business

kilometre ruling, making it compulsory for all taxpayers who wished to claim a

travel allowance to keep logbooks.

“With these new developments soon to be implemented, employees

should reconsider their respective travel allowances and determine if the

allowance will still benefit them,” she said.

“If the outcome is negative, employees should change their salary

packages to avoid potentially damaging issues the amendments might cause.”

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