A reimbursive travel allowance pays an employee for actual business kilometres travelled, at a rate per kilometre, rather than a flat monthly amount. It reimburses real travel rather than providing a fixed allowance.
What it means
The tax treatment turns on the rate and the distance. Where the employer reimburses at or below the SARS prescribed rate per kilometre, and no other travel allowance is paid, the reimbursement can be free of PAYE. Above the prescribed rate, or where the distance is high, part becomes taxable. This differs from a fixed travel allowance, which is partly taxed every month regardless of actual travel.
Where it fits in
A reimbursive travel allowance is an earnings component driven by logged business kilometres and a rate. It carries its own IRP5 source codes, separate from the fixed travel allowance, so SARS can apply the correct treatment on assessment.
Key rules
- Reimburses actual business kilometres at a per-kilometre rate.
- Can be free of PAYE at or below the SARS prescribed rate, with no other travel allowance.
- Taxed in part above the prescribed rate or at high distances.
- Reported under its own IRP5 source codes, distinct from a fixed travel allowance.
