With the 2020/2021 tax year being a rather unprecedented year for taxpayers with very little business travel taking place as a result of lockdown periods, SARS will be using a magnifying glass when looking at taxpayers claiming for deductions on company travel. Depending on how much company travel took place and how your employer managed it on the payroll, you may be in for a potential tax shortfall.
Here’s a quick rundown:
Where the employee has only been taxed on 20% of the travel allowance/expense value:
- the logbook potentially won’t justify the full benefit – i.e. due to not being able to do much business travel during lockdown!
- on assessment, SARS will redo the tax calculation and the employee will be liable for the shortfall in tax.
- If the employee also received a reduction in remuneration in the year, the tax liability will be based on the lower income level.
- many employers changed the tax calculation – i.e. to tax 80% of the travel allowance/expense value, so for those employees where employers did some forward-thinking in this regard, they are less likely to have a problem.
- to be safe, many employers wanted to change the benefit to 100% taxable – this created issues on SARS e@syFile:
- in this instance many employers set up a new fully taxable code to cater for this;
- this now does not enable SARS to determine if the employee had a car/travel allowance and thus will cause issues with the logbook in the sense that one only submits a logbook if you have the benefit, thus preventing certain taxpayers from being able to claim the usual expenses.
Always seek the advice of a professional when dealing with “out of the ordinary” tax scenarios. We have many professionals that can assist you with this. Click here to contact one of our trusted Associates.