15 Travel allowance ‘Best Practice’ Tips
1. Never grant a travel allowance to an employee who does not travel in a privately owned vehicle for business purposes (and who does not have a valid driver’s license).
2. Your travel policy should put a duty on employees who are paid travel allowances to advise the payroll administrator if a different car is used to travel from the one used for the travel allowance estimate.
3. During the year, estimate the travel allowance value at the following mileposts –
a. Always at the start of a new tax year.
b. If the travel requirements for the job change.
c. If a new car is used for the travel.
d. At least once during the tax year.
4. The estimated travel allowance value:
a. Should not be excessively high
b. Should not be less than the estimated value of the business travel
c. Should be increased ‘marginally’ above the business travel value.
5. Keep a written record of how the employer estimated the travel allowance value in case of an audit
6. Keep a written record of why the employer decided on the 20% inclusion rate if the employer applied this rate
7. Remind employees that they must keep a logbook
8. Don’t allow travel allowances to be structured as a component of a Cost to Company structure (if the employer does, ensure that the employee understands that he is effectively paying the employer’s business travel expense out of his package).