Which SARS PAYE code will the reimbursive travel allowance fall under?
24 June 2015
Posted by: Author: SAIT Technical
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.
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