Salary and car allowance question

Time for a slight revive.

I'm currently doing between 3000 and 4000 business kilometres per month. I claim this from my company (who pays a modest amount of R3.05 per kilometre). I currently do not have a car allowance. I currently keep a log book for my car[sup][1][/sup].

I am wondering will there be any benefit for me asking my company to restructure my salary to include a car allowance? (I'm forecasting that I will do between 25000 to 40000 km business kilometres per year.)


[sup][1][/sup] I own both a motorcycle and a motorcar. I use my motorcar almost exclusively for business travel and my motorcycle for only personal travel. Thus my business kilometres to personal kilometres ratio on my car is disproportionately high because of this. I do between 100 and 200 personal kilometres per month on my car.

Note: I will use the car allowance for the car only.
 
I'll try and help.

1. Reimbursive travel allowance: No employees tax is deducted (ie PAYE not affected)
2. Fixed travel allowance: Employees tax is deducted (ie PAYE is affected)

As you are travelling more than 8000km per year you are taxed on the full amount at assessment. You should be claiming your travel deductions against this though.

This is effectively the same as with a fixed travel allowance.

I guess the deciding factor would be your travel deductions, do they currently exceed the travel allowance (ie you are losing out on deducting the excess expenses) or are they below your allowance amount (ie you are claiming all your expenses and being taxed on the excess allowance)?

If they are above then it might be better to get a fixed travel allowance if below rather stay with the reimbursive allowance.


Sidenote: Just remember your salary is [X + R3.05 x km travelled] restructuring your salary to include a fixed travel allowance is basically [X: 80% 'basic', 20% allowance], you would actually come out worse this way. What you would need to ask is [X + R10 000 fixed allowance], which the company may or may not want to do.
 
Last edited:
KalMaverick said:
I'll try and help.

1. Reimbursive travel allowance: No employees tax is deducted (ie PAYE not affected)
2. Fixed travel allowance: Employees tax is deducted (ie PAYE is affected)

As you are travelling more than 8000km per year you are taxed on the full amount at assessment. You should be claiming your travel deductions against this though.

This is effectively the same as with a fixed travel allowance.

I guess the deciding factor would be your travel deductions, do they currently exceed the travel allowance (ie you are losing out on deducting the excess expenses) or are they below your allowance amount (ie you are claiming all your expenses and being taxed on the excess allowance)?

If they are above then it might be better to get a fixed travel allowance if below rather stay with the reimbursive allowance.


Sidenote: Just remember your salary is [X + R3.05 x km travelled] restructuring your salary to include a fixed travel allowance is basically [X: 80% 'basic', 20% allowance], you would actually come out worse this way. What you would need to ask is [X + R10 000 fixed allowance], which the company may or may not want to do.
Click to expand...

Is a car allowance considered a travel allowance?
 
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