Travel expenses and their tax impact are a complex issue for many. It’s no surprise that it’s a common theme on our Helpdesk. We’ve selected some frequently asked questions to help you navigate this issue when completing your tax return.
1. When can I claim travel expenses?
You are only able to claim travel expenses as a tax deduction if you travelled for business related reasons AND kept a valid logbook AND you fit into one of these categories:
-You have a company provided vehicle (source code 3802 or 3816 on your IRP5) or,
- You are a commission earner, independent contractor or sole proprietor.
2. My employer reimbursed my travel expenses using the SARS prescribed rate per km. Can I claim my actual travel expenses on the ITR12 if I kept a logbook?
No you cannot claim a travel deduction because the reimbursement you received is not taxable and any expense you incurred while traveling should have been refunded to you by your employer. The source code on the IRP5 would be 3703 and this won’t allow you to complete the travel section on your return.
3. How detailed is my logbook supposed to be?
The logbook should contain a detailed record of your business mileage for the tax year. It must include opening odometer and closing odometer reading and full details of business mileage and private mileage for each trip i.e date, starting point, destination, kms, reason for trip.
4. Do I need to submit my logbook?
You need to submit your logbook should SARS request it. If they don’t request it as soon as you’ve filed your return, you need to retain it for 5 years from the date you received your assessment as SARS is allowed to request your documents any time during this period.
5. What is an employer-provided vehicle?
It’s a vehicle that’s owned by the employer but the employee is allowed to use the vehicle for business and some cases, private purposes. Some companies only allow their employees to use the vehicle for business travel, whilst others allow the employee to take it home and use it for personal travel as well.
6. How is the fringe benefit calculated on a company car?
The monthly fringe benefit is calculated by taking the cost of your car multiplied by 3.25% (if there is a maintenance plan in place) or 3.5% (with no maintenance plan). The cost of the car must include VAT but exclude finance charges.
7. How can the taxable fringe benefit for employer-provided vehicles be reduced?
The taxable fringe benefit for employer-provided vehicles can be reduced by the portion of the license fees, insurance, fuel and maintenance expenses that are directly incurred and that relate to actual private kilometres travelled in that year. This deduction can only be claimed when you submit your tax return. Unfortunately your employer is not allowed to process the deduction on the payroll. Should your employer pay you an allowance in respect of these expenses, you may still be entitled to the deduction; however the allowance would be taxable.
8. I am a sole proprietor - how do I work out my travel deduction?
A Sole Proprietor uses their own vehicle for both business and private travel, however only the portion of total motor vehicle expenses relating to business use will be deductible. You must submit a detailed travel logbook and calculation (which shows how you worked out your travel deduction) in order to claim the travel expense.
Let’s look at an example of how to work out your business travel claim assuming you drive for business and private purposes.
Total km travelled = 14 500km
Business km = 10 000km
Total motor vehicle expenses = R27 500 (fuel R15 000, maintenance and repairs R1 500, insurance/licence R5 000, finance charges R6 000).
Business travel claim (actual costs method):
Business km to be claimed = 27 500 * 10 000 km / 14 500 km = R 18,965.52
9. I receive a travel allowance from my employer. I know I cannot claim travel from my home to my office. However, sometimes I drive directly from my home to the client. How do I calculate my business mileage in this situation?
In this situation you would deduct the distance from your home to the office from the total distance driven to the client.
For example, assume distance from home to office is 10km and distance from home to client is 30km. The business distance would be 20km (30km – 10km).
10. I receive a travel allowance and SARS has requested my documents for verification. The car I drive for work is in my husband’s name. What do I do?
You can claim a travel deduction even though the car does not belong to you provided you are paying for the vehicle running costs and can prove this to SARS.