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Should business trips on the gautrain be included under code 3702 (reimbursive allowance)?

Tuesday, 30 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: My client receives a salary under code 3601. However his IRP5 for 2014 also has a reimbursive travel amount under code 3702. The clients has provided us with the schedules making up the claim. Some of the payments received within the 3702 code total are for Gautrain trips. Are the Gautrain trip costs tax deductible?

The ITR12 only accommodates a reimbursive deduction for a vehicle. How do we handle this situation? It will be most gratefully appreciated of one of the tech’s could please help.

A: According to the SARS guide 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)(i)(aa) refers to "travelling on business, as contemplated in paragraph (b)” and it is only paragraph (b)(i) that doesn’t refer to a motor vehicle ((ii), (iii) and (iv)) or vehicle (in (iiiA)).  Section 8(1)(b)(i) refers to "transport expenses” which could well include Gautrain costs, but its purposes is then only actually to deem travel between home and work to be private travel.  SARS’s Interpretation Note 14 (which sets out the current practice prevailing) only deals with motor vehicle costs. 

We therefore submit that an allowance for Gautrain costs is not a "travel allowance” as envisaged by section 8(1)(a) and that the codes 3701 or 3702 is not appropriate and must be reflected against another code. 

The problem is that the employee will then not be able to reduce the allowance on assessment. 

It is not clear why the allowance was not dealt with in terms of section 8(1)(a)(ii). 

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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