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Tax on fringe benefits vs savings on air fares

Dec 07 2015 07:53

Cape Town - To help make the filing process as seamless as possible Fin24 has joined forces with the SA Institute of Tax Professionals (SAIT), to answer users' tax questions as far as possible.

User question:

"I work in Bloemfontein and live in Cape Town. Subsequently all travel expenses (flight, car hire, accommodation) to Bloemfontein on a fortnight basis are considered to be fringe benefits and as such taxable, which I do not dispute.
 
During the weeks that I actually am in Cape Town I am also required to travel extensively to clients in close vicinity of me (but far from my employer). Three matters now arise:

1. Accommodation – let’s leave this one for now

2. Car – my employer allows me to claim R3.18 / km, which seems to be correct.

3. Air fares: I am struggling with the following issue: every time that I travel to Bloemfontein I am taxed at 40% on the air fares, but the numerous times that I actually was in Cape Town for formal meetings with clients I saved my employer the airfares from Bloem to Cape Town and back.

The bottom line for me was that in 2015 I had to pay +-R25 000 for fringe benefits, whilst I saved my employer +-R25 000 in air fares to Cape Town. Can these cost/benefits be set-off?"

Piet Nel, SA Institute of Tax Professionals responds:

Reimbursement in respect of use of own vehicle for employer business

The rate at which the employer reimburses an employee for business related travel expenses is a matter of negotiation between the two parties. The rate of R3.18 is the rate that may be used for a tax reduction (under the so-called simplified method), for the year of assessment ending on the last day of February 2016. 

If you were reimbursed for less than 8 000 kilometres during this year the amount received will essentially have no tax consequences.  

Air fares

The Act, unfortunately, doesn’t allow for the taxable value of a travel facility (in respect of actual travel) to be reduced by, can we call it the notional cost. The cost of travel from Bloemfontein to Cape Town for purposes of the employer’s business would not have been a taxable benefit.  

* Have a question? Send it to us and we will find an expert to answer.

PLEASE NOTE: The important deadline dates in the 2015 tax season are:

September 30 2015: Manual/postal submissions
November 27 2015: At a SARS branch (non-provisional)
November 27 2015: eFiling (non-provisional)
January 29 2016: Provisional taxpayers via eFiling

ALSO SEE previous tax questions from users:

Can interns claim for travel expenses?

Home care and medical rebates

What to do when tax docs burn

Expat receiving pension from SA: Do I pay tax?

What are the limits on claiming travel expenses?

Can I claim for using my own car for work?

Temp teaching for 6 months, must she pay tax?

Working in Saudi, do I also pay tax in SA?

Can I claim for travel expenses?

Tax filing: No financial records yet, what now?

Filing returns for an education trust

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sait  |  tax filing season 2015  |  money clinic  |  tax
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