Paying taxes is an activity done by all but enjoyed by no one and it’s therefore no wonder that people are constantly trying to find legal methods to pay less tax.
However, when it comes to saving your hard earned money from the taxman, one really needs to look no further than travel allowances. Many employees use their own personal vehicles to carry out business related tasks on a day-to-day basis and the scarily exciting thing is that it is perfectly legal to claim an allowance on this expense! However, there are some finer details to be processed before one becomes eligible for this tax saving method:
Travel logs are absolutely essential in the process of claiming a travel allowance as SARS requires real evidence off which they can calculate the accumulate sum of the expense. Logbooks are in fact compulsory when it comes to claiming a travel allowance. So what are the minimum details that SARS requires in order to process your application for an allowance?
- Date on which the travel took place.
- The respective destination (to and from).
- The kilometres travelled.
- The reason for travel.
Furthermore, SARS will also require all the details of your vehicle, such as registration number, make, model and manufacturer of the vehicle. Completing a travel log every time you use your vehicle may seem like an arduous task but luckily there is now an easier way to go about this frustratingly necessary activity. As technology has progressed, products such as GPS’s have now become available that have the ability to instantly track the distance you’ve travelled and to generate a SARS compliant log book based on the data!
Who Qualifies for Travel Allowance?
To put it simply, any employee who uses their own private vehicle for business related purposes automatically qualifies for a travel allowance on the distance travelled. This also applies through to directors of private businesses who are generally treated as employees for tax purposes. However, sole proprietors do not qualify as employees and are thus not eligible to claim a travel allowance. There is a downside to the travel allowance system, namely that driving from home to work does not, in the eyes of SARS, constitute as worthy of a travel allowance!
It’s important to note that you cannot get a travel allowance for vehicles owned by your employer and that once you receive an allowance it is important that you complete an annual tax return wherein you will need to justify your respective business travel. Not doing so is to risk losing your travel allowance!
In conclusion, not applying for a travel allowance when you are eligible is nothing short of crazy in a tax sense as you are basically throwing away your hard earned money into the taxman’s hands. Remember, if you do wish to claim a travel allowance then it’s integral to keep your travel logs up to date!