Are travel reimbursements considered ‘remuneration’ for UIF purposes?
17 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
allowance (SARS code 3702) is taxed on assessment and is not subject to PAYE.
As UIF is calculated on gross taxable earnings would travel reimbursements in
this category be considered UIF earnings?
We don’t normally include this in UIF earnings as it is not
taxable on payroll, but strictly speaking is this is a taxable earning?
A: In terms of
the Unemployment Insurance Contributions Act, 2002 (section 6) the amount of
the contribution payable is one per cent of the remuneration paid or payable to
that employee. In terms of section 1 of
that Act "remuneration” means "remuneration” as defined in paragraph 1 of the
Fourth Schedule to the Income Tax Act, but does not include any amount paid or
payable to an employee -
(a) by way of any pension, superannuation allowance or
(b) which constitutes an amount contemplated in paragraphs
(a), (cA), (d), (e) or (eA) of the definition of "gross income” in section 1 of
the Income Tax Act; or
(c) by way of commission.
Remuneration (in the Income Tax Act – Fourth Schedule)
specifically includes a portion "of the amount of any allowance or advance in
respect of transport expenses referred to in section 8(1)(b), other than any
such allowance or advance contemplated in section 8(1)(b)(iii) which is based
on the actual distance travelled by the recipient, and which is calculated at a
rate per kilometre which does not exceed the appropriate rate per kilometre
fixed by the Minister of Finance under section 8(1)(b)(iii)”.
Code 3702 is to be used for "a reimbursement for business
kilometres exceeding 8 000 kilometres per tax year or at a rate exceeding the
prescribed rate per kilometre or the employee receives any other form of
compensation for travel.”
Section 8(1)(b)(iii) applies "where such allowance or
advance is based on the actual distance travelled by the recipient in using a
motor vehicle on business (excluding the said private travelling), or such
actual distance is proved to the satisfaction of the Commissioner to have been
travelled by the recipient, the amount expended by the recipient on such
business travelling shall, unless the contrary appears, be deemed to be an
amount determined on such actual distance at the rate per kilometre fixed by
the Minister of Finance by notice in the Gazette for the category of vehicle
In such a case it would then not be remuneration and no
unemployment insurance fund contribution is determined on that amount.
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