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How to cruise through a travel audit efficiently

Posted 3 April 2019 under TaxTim's Blog


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How to cruise through a travel audit efficiently

Surely most of us love to travel, but traveling for business purposes is no fun when it comes to completing your tax return.

SARS has some rather onerous requirements, but as long as you know what you need, submitting your documents to SARS should be plain sailing.

Note, you can only claim a travel deduction if one of the below applies to you:

  • You are a salaried employee and receive a travel allowance from your employer with source code 3701 or 3702 or,
  • You are a salaried employee and receive the use of a company car from your employer (i.e. fringe benefit) with source code 3802 or 3816 or,
  • You are an independent contractor (source code 3606) or commission earner (source code 3616) or,
  • You run your own business i.e. you are a sole proprietor or freelancer

Please see all the documents you may need to send to SARS, should you have a travel claim on your return:

A: Travel logbook (having the following content):

* Dates for travel, including your Business and Private kilometres applicable to the tax year that’s being audited.

* Description of the details of the trip (e.g.: meeting client, J. Smith at Eskom)

* Starting odometer reading (e.g.: 1 March 2018) and closing odometer reading(s) (e.g. 28 February 2019)

Kindly note that your logbook must be in a SARS approved format, you can use the SARS-Travel-e-log-book Please add a column for your private travel as SARS have recently started asking for this too.

B: Purchase contract of the vehicle (if the vehicle belongs to you)

C: Letter from employer (Employer Provided Vehicle)

* You’ll need a letter from the employer stating that the vehicle is used for business purposes, vehicle information and fringe benefits applicable to employee.

D: Logbook Calculation Summary

(a screenshot of our Travel Deduction Calculator showing the travel calculation will suffice). TaxTim Travel Calculator

E: Actual vehicle expense invoices (unless you claim based on the ‘deemed’ method)

Please note; should you have used more than one vehicle for business purposes, all relevant information for each vehicle used will be required.

‘Deemed’ versus ‘Actual’

If you are a salaried employee and receive a travel allowance coded to 3701 or 3702, you may choose to calculate your deduction based on ‘deemed’ or ‘actual’ methods. The ‘deemed’ method simply means that you can use the special SARS approved rates tables for fixed cost, fuel and maintenance expenses and you don’t need to provide actual invoices to SARS.

If you are claiming travel but do not receive an allowance coded to 3701 or 3702 then you must use the ‘actual’ method to calculate your travel and then you must submit travel invoices to substantiate your claim.

Please make use of our Travel deduction calculator to check your calculations and ensure you are claiming correctly based on the type of taxpayer that you are.

Once you have submitted all the necessary documents, SARS will let you know when the audit has been completed and the outcome.

Below are some travel FAQ from our users, which may be helpful to you:

1. I work for a motor car company and drive many vehicles, which registration number should I use in my tax return?

You would need to enter the details for all of the cars. The system will ask for them one by one.

2. What is the maximum amount (percentage) that one is allowed as a travel allowance based on the total package earned? (i.e. If my total package is say R10 000, maximum amount allowed as travel allowance is say 30%, then my salary will be R7 000 and my travel allowance R3 000. I just need to know the percentage amount so that I can structure my total package accordingly to get the maximum tax benefit)

There is no maximum percentage, however if SARS see a salary that is made up entirely of a travel allowance, they will disallow the benefits. Ideally, it should be in relation to your travelling and not really exceed 20/30%.

3. How do I go about claiming a travel expense if I use my car 70% for business and 30% private? (I have a detailed logbook and do about 18,000km business travel per year, but I don't receive a travel allowance. I am a salaried employee, but I receive commission too)

If your commission is more than 50% of your overall income then you can deduct expenses against this income. You would include the amount in the  ‘Other deductions’ section (source code 4015 - travel expense) using our Travel Allowance calculator to assist with your calculation.

4. I've changed cars during the tax year, how should I handle my travel allowance calculations and log book? Should I keep a different logbook for each vehicle? I have also leased a vehicle whilst waiting for my new vehicle, how should this be recorded?

You are able to claim for all 3 cars you used. You need to account for the kms you travelled on all three cars individually in one logbook. This will mean that you will start the logbook with your first vehicle, then on your last trip travelled with that car, close off the kms by stating total business and private kms.

On your tax return you will state that you used 3 vehicles and then you will be given the chance to enter their details one by one. For the rental car you can indicate that it is a leased car and then you can capture the opening and closing kms and the rest of the car’s details. Where you kept records of actual expenses, you would need to enter these as well for each car.



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TaxTim
can help
you file your
Tax return!


TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund

Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

Get started