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Tax implications if one receive a subsistence allowance

Posted 7 June 2016 under Tax Q&A


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PL says:
5 June 2016 at 20:35

We travel for work purposes, and are considering getting a daily allowance paid instead of submitting our expenses. What is the amount allowed per day / other amounts subsistence amounts, and are there tax repercussions on this method.

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TaxTim TaxTim says:
6 June 2016 at 7:51

Approximately how many km's do you travel per year for work to meetings or clients?
Bear in mind that travel from home to the office is considered personal travel.

PL says:
6 June 2016 at 10:25

When we travel away from home today, our company pays for the flight, accommodation and usually breakfast.
We claim back for our food / other expenses by submitting slips back to the company, and they reimburse us.
We would like to know if a daily allowance (subsistence allowance?) would be better rather, and what tax repercussions will there be from this method.

TaxTim TaxTim says:
7 June 2016 at 8:07

There shouldn't be any tax consequences for the method you currently describe. The company is simply reimbursing you once you provide your slips.

For local travel within South Africa, SARS has set a ā%u20AC%u0153deemedā%u20AC rate for meals and incidental costs. These rates apply per night the employee spends away from their home. SARS has also set a daily amount for foreign travel (i.e outside of South Africa), which varies, per country.

The rates are updated annually and can be found on the SARS website.

For 2016/2017 tax year it is:
Local meals and incidental costs R372

The allowance for incidental costs is to cover beverages, private phone calls, tips and room service.

Therefore if your company paid out R372 per night you spent away, there would be no tax consequences and you would not need to provide proof of your travel to SARS if requested. This is known as the tax free subsistence rate. If your company paid more than this rate, you could deduct either the deemed rate, or your actual expenditure but either way, you would be taxed on any excess allowance that was unspent.


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