When a travel allowance has been received, the employee must determine the allowable deduction for business travel. There are two ways in which this could be done:

• Using actual business expenditure (The value of the vehicle is limited to R665 000 for purposes of calculating wear and tear, which must be spread over seven years, while finance costs are also limited to a debt of R665 000. For a leased vehicle the instalments in a year of assessment may not exceed the fixed cost component in the table), or
• Using a deemed cost per kilometre as per the following table:

Note: The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.

The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travel allowance.

Employees’ tax is based on 80% of the travel allowance. However, if the employer is satisfied that at least 80% of the use of a motor vehicle will be for business purposes, employees’ tax may be based on 20% of the travel allowance.

When the following criteria are met, no employees’ tax is payable on a reimbursive travel allowance paid by an employer to an employee:

This alternative is not available if other compensation in the form of a travel allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle. In such an instance the reimburse travel allowance will be taxable and expenditure for business travel could be claimed in the same manner as with a normal travel allowance.