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Tax Return Travelling Allowance: What Is Allowed And What Is Not

01 February 2006   (0 Comments)
Posted by: Author: Magda Terry
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Tax Return Travelling Allowance: What Is Allowed And What Is Not

If you thought that SARS would never audit you, an ordinary guy in the street and that they only go for the big guns-think again!.Recently, one of my youngest clients, who has only been employed for about three years was audited by SARS because of her travel claims that were submitted over the past two years.

What you should do: 

-Keep a day-to-day log sheet and  submit this with your tax return.

-Log the odometer reading on your  car at the beginning of each month.

-Use the entries in your diary when you visit clients to determine your business kilometers travelled each day.Travelling bet ween your home and the office will be regarded as private use.

-Make sure that the mileage logged on the day that a service has been done, corresponds with your daily  log sheet. 

What you should not do:

-Don’t  use the maximum deemed  mileage of 32 000 kilometers allowed by the Act if you did not  travel 32 000 kilometers in total.This stipulation is only for taxpayers who have travelled more than  32000 km and did not keep an accurate log.These taxpayers are at a definite disadvantage.

-Only claim for the actual kilometers  travelled according to your odometer readings.

-Don’t think that you will not be audited by virtue of your travel claim.

-Every taxpayer who claims against a travel allowance will ultimately be audited.

What SARS requires from you at the time of an audit:

-A detailed travel log reflecting opening kilometers as at 1 March  2005.

-Travel per day, split between business and private.

-Destination to and from.

-Closing kilometers on 28 February  2006 .

-Service record with kilometers.If the vehicle was sold, date of sale and selling price and the purchaser’s information.

-A copy of hire purchase/lease agreement.

-Letter of appointment from your employer that will confirm that the nature of your duties are such that   you are required to use your own  vehicle for business purposes.

-The vehicle must be available fora physical inspection.So,be prepared

Please note that the penalties are quite severe, should SARS, after an audit, realise that false information was submitted with your tax return.The onus of proof always rests with you, the taxpayer, in terms of section 82 of the Income Tax Act.

Source: By  Magda Terry (TaxTALK)


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