A travel allowance is a recurring amount an employer pays toward the cost of an employee using their own vehicle for business travel, taxed differently from an ordinary taxable allowance because part of it is presumed to cover genuine business expense.
What it means
SARS only includes a portion of the allowance - typically 80%, or 20% if the employer is satisfied at least 80% of the employee's travel is for business purposes - in the monthly PAYE calculation. The employee then reconciles actual business kilometres travelled against a logbook when filing their personal income tax return, which can produce a refund or additional liability.
Where it fits in
The reduced inclusion rate is applied during payroll's monthly PAYE calculation, but the allowance still appears in full on the IRP5 under its own source code so SARS has the gross figure needed for the employee's annual reconciliation against their logbook.
Key rules
- Included in PAYE at 80% by default, or 20% if the employer determines at least 80% of use is for business travel.
- Final tax treatment depends on the employee's logbook of actual business kilometres, settled on assessment.
- Reported in full on the IRP5 under its own source code, separate from basic salary and other allowances.
- Distinct from a reimbursive travel payment, which is taxed under different rules tied to a fixed rate per kilometre.
