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David says: 18 November 2021 at 21:02 I have used my vehicle for official travel - there is only code 3703 on my IRP5. Can I claim travel expenses in my return? |
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TaxTim says: 19 November 2021 at 11:20 This is a reimbursive (tax-free) allowance which means your employer must have reimbursed you for business mileage. You cannot claim any vehicle expenses against this source code. If you travel frequently for work, you could ask your employer to pay you a travel allowance. Further details about a Travel Allowance: You should only be offered a fixed travel allowance if your job involves a significant amount of vehicle travel for business purposes. This may apply for example, if you are a commission earner or a salesman and you spend a significant portion of your day travelling to clients. Sometimes employers offer a travel allowance without explaining the tax effects of it and how to claim the travel deduction in the annual tax return. The end result is often a disgruntled taxpayer because they have an unexpected tax bill to settle on assessment. This usually happens because the employee was unaware that they had to keep accurate travel records, or because they actually didn't incur sufficient business mileage to justify receiving a travel allowance. As a general rule, 80% of the car allowance is subject to monthly PAYE. This is due to the assumption that you travel 80% personal and 20% for business. Should you travel significantly more for business, your employer may opt to tax only 20% (where 80% business use is assumed). However, it is up to you at year end to submit details of your actual mileage to SARS and a detailed calculation will be performed on assessment which may result in a refund if it turns out that you paid too much tax in the year. If you fail to submit a valid logbook, or travelled less than expected for business, you will end up owing the taxman when you submit your tax return and this often comes as a surprise to many taxpayers. Always bear in mind that travel from your home to your office is not considered business travel and you won't be allowed to include this in your travel claim. You need to keep a logbook where you record all your business and private kms travelled to back-up your travel claim. For more details of documents you need to submit to SARS, in relation to your travel allowance, please read our blog here. SARS will look at the amount of your travel allowance to make sure it looks reasonable compared to the value of your car as well as the business km's you travel. You are probably safe in structuring your allowance so that the after-tax amount covers your monthly instalment, fuel, maintenance, and insurance. Please refer here to our Travel Calculator to help you work out your travel deduction. Remember, the claim will always be limited to the actual travel allowance that you receive. If travelling is not a significant part of your job and happens only occasionally, then your employer should simply reimburse you at the SARS deemed rate for each trip you do. The SARS rate is currently R3.82 per km. This type of reimbursive travel allowance has no tax effect and consequently no onerous logbook requirement. |
