Several taxpayers are still unsure of how the calculation of the reimbursement for business miles traveled is done, even though the tax filing season is still open until 24 October 2022 for non-provisional taxpayers and until 23 January 2023 for provisional taxpayers.
The term “travel allowance” refers to any payment made to or advance granted to an employee in connection with travel costs for professional purposes.
Essentially, two eventualities are covered by the legislative framework:
- A travel reimbursement is paid to an employee based on actual business travel.
- In contrast, a travel allowance is given to an employee to finance transportation and is typically a set rate or amount per pay period.
Knowing the differences is crucial because the aforementioned are taxed differently. The updated rate per kilometer for motor vehicles is announced in a Government Gazette each year following the budget address.
Rates per kilometer are calculated using the following table (as published in Government Gazette No. 46015 of March 8, 2022), which may be used to assess the permitted deduction for business travel against an allowance or advance where real costs are not claimed:
AA Rates Per KM
With the streamlined method, a fixed rate per kilometer is used, and the employee is not given any further remuneration from the business (aside from parking or toll payments) in the form of an advance, additional allowance, or reimbursement.
The mandated rate, sometimes referred to as the AA rate per kilometer, is R4.18 for the tax year 2022–2023. The authorized rate of reimbursed travel expenses is not taxed. Regardless of the number of business miles traveled, compensation is included for PAYE purposes if it exceeds the mandated amount of R4.18 per kilometer. Unlike the fixed travel allowance, where only 80% of the amount is due to PAYE, the full inclusion amount is liable to PAYE.
How do I Calculate my Car’s fuel economy?
If you are aware of the distance traveled and the amount of fuel required to cover that distance, calculating your car’s fuel consumption is simple. These are the steps you must take.
- Fill up your petrol tank.
- Note the mileage that is now showing on your odometer. Set the trip odometer on your automobile to zero if it has one.
- Drive your vehicle generally until you require another fill-up.
- Fill the fuel tank when it is empty and keep track of your fuel consumption.
- To find out how far you’ve traveled since your previous fill-up, use your trip odometer. To calculate how far you have traveled without a trip odometer, note the most recent odometer reading and subtract the previous reading.
- Divide the total distance traveled by the total amount of gasoline consumed to find the number of kilometers your automobile can travel on one liter of petrol. Example: 400 km divided by 42 liters equals 9.5 km per liter.
- By multiplying the gasoline consumption by 100 and dividing it by the total number of miles travelled, you can calculate your car’s fuel efficiency (Metric System). For instance, 10.5 liters every 100 kilometers = 42 liters x 100 / 400.
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