23 February 2010
Further clamp down on salary structuring
Zohra De Villiers (Associate Director KPMG)
During the 2009 Budget speech, the following changes to travel allowances were announced. From March 1 2010, 80% of a travel allowance will be subject to Pay-As-You-Earn. In addition, the use of deemed kilometres will fall away and a travel log book must be kept by all employees who receive a travel allowance. Depending on the extent of business travel incurred during the tax year, the taxpayer may be able to claim portion of the tax withheld back on submission of his or her tax return.
Currently, the private use of an employer's motor vehicle is included in the employee's monthly income, as a fringe benefit, at 2.5% of the determined value of the car. The determined value is the cost of the vehicle, excluding VAT and finance charges. During the 2010 Budget it was announced that this company car fringe benefit value would be increased. It was stated that this amendment will limit the potential abuse of the company car fringe benefit. Taxpayers have to brace themselves that their take home pay in either case would reduce.
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