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Which SARS PAYE code will the reimbursive travel allowance fall under?

24 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Currently the employer reimburses the employee at a higher rate than what SARS prescribes, we therefore use code 3702. However, our company does not allow an employee to claim for the first 10km of travel. Therefore, when the 10 kms for which a travel claim is not paid, it is added to the total KMs claimed and the rate per km is much lower. Based on this, is it not correct to say that the travel claim should be under code 3703?

I think that the 10km should be ignored from the calculation and therefore should still remain on code 3702

A: Code 3703 is to be used for a non-taxable reimbursive travel allowance – it is a reimbursement for business kilometres not exceeding 8 000 kilometres per tax year and at a rate which does not exceed the prescribed rate per kilometre.  Code 3702 is 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. 

Code 3701 is used in all other instances. 

On the basis that you don’t pay for the first 10 kilometres of business travel, we don’t understand why it is added to the total kilometres claimed.  It would only be true that a lower rate is paid if the travel exceeds the 10 kilometres, but we think it is irrelevant.  The total amount reimbursed must be reflected on the IRP5 and the employee makes the deduction based on the total business kilometres travelled. 

It would not be correct to use code 3703 in this case. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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