A company can optimally structure travel allowance by implementing a Travel Allowance Calculator to ensure that when travel allowances are elected and built into a remuneration package, that the travel allowance is structured in a tax compliant yet optimal manner.
The purpose of using a Travel Allowance Calculator is to compute a suggested tax “break-even” travel allowance amount for the ensuing fiscal year. SARS has confirmed that the break-even method of computing the travel allowance is acceptable.
The Travel Allowance Calculator only has optimal use, for employee and employer, if it forms part of the overall risk management on employee travel. The travel calculator will have less value if it is not supported by the necessary policy, processes and supporting documentation.
The following should be established and maintained in order to solidify the governance of the travel policy and travel allowance calculator –
A detailed logbook in the SARS accepted format. Note that the logbook must be kept and made available for inspection for up to 5 years.
A Travel Allowance Declaration, which the employee must sign to confirm the validity of information provided to arrive at a suggested break-even amount and that the employee accepts the consequences thereof if false information was submitted.
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