10 Additional Travel allowance amounts
Only if the employee qualifies for a travel allowance, any payments made by the employer in respect of the running costs of the employee’s motor vehicle that are additional to the regular travel allowance amount paid in cash, must also be administered as a travel allowance, and taxed and administered as such in the payroll.
Items paid for by the employer that must be treated as a travel allowance are those expenses that are directly related to the running costs of the employee’s motor vehicle.
These include payments for fuel, maintenance, licence, insurance, and tyres, and they must be allocated in the payroll to the employee that has benefited and administered as an additional travel allowance amount.
Expense items that do not relate directly to the running costs of the motor vehicle (such as parking or toll fees), can be reimbursed by the employer as a normal business expense.
Being a reimbursement, they are not classified as a travel allowance (or a travel reimbursement), do not affect the tax calculation of the employee in any way, and are not reported on a tax certificate.
Examples follow of these ‘additional’ types of running cost expenses of the motor vehicle that are paid for by the employer:
• The employee’s petrol slips that are reimbursed by the employer
• The employee’s vehicle maintenance expenses that are reimbursed by the employer
• The use by the employee of the company’s garage or petrol card
• The employee is allowed to put in fuel on the company’s petrol account at a garage.
How the employer elects to pay for the running costs of the employee’s motor vehicle is not relevant – the point is that these payment must be taxed and administered as a travel allowance.