Chapter 1. Introduction, Scope, and Terminology
The purpose of this workbook and the webinar that accompanies it is to bring employers up to date with the latest legal and administrative requirements for the three methods of travel compensation that are paid or granted to employees to compensate them for incurring the company’s business travel expenses (company cars, travel allowances, and travel reimbursements), and at the same time to give some guidance in down-to-earth terms on how to apply these requirements in your payroll office.
The workbook is based on the legislation and regulations that are in force for the 2023/24 year of assessment.
Extracts from the latest legislation and SARS documents are included in the workbook where they are relevant, and the most important legislation has been included in the appendix for your convenience.
1.1 Legislation and Regulations Referenced
The following documents were referenced when writing this workbook.
Legislation
1. Income Tax Act: Definitions – Gross Income
2. Income Tax Act: Section 8 – Certain Amounts to be included in Income or Taxable income
3. Income Tax Act: Section 23(m) – Deductions not allowed in Determination of Taxable income
4. Income Tax Act: Fourth Schedule – Amounts to be Deducted or Withheld in respect of Normal tax
5. Income Tax Act: Seventh Schedule – Benefits or Advantages derived by Reason of Employment
SARS Interpretation Notes and Guides
6. SARS IN 13 S23(m) Limitation of Deductions (15 Mar 2011)
7. SARS IN 14 Allowances, Advances & Reimbursements (Mar 2021 – Issue 5)
8. SARS IN 72 Right of Use of Motor Vehicle (Mar 2013)
9. SARS IN 82 Input Tax on Motor Cars VAT (Mar 2015)
10. SARS Guide for Employers for Allowances for 2023 PAYE-GEN-01-G03
11. SARS Guide 2022 03 Allowances 2023 PAYE-GEN-01-G03 Rev 12
12. SARS Guide 2022 03 Fringe Benefits Version 11 23 Feb
SARS Regulations, Notices, and Specifications
13. SARS PAYE BRS (Business Requirements Specification) version 22.0 issued on 24 February 2023.
14. Calculation of VAT on the company car fringe benefit deemed supply (Gazette No. 13651 22 Nov 1991)
15. Fixing of Rate per Kilometre in Respect of Motor Vehicles (Gazette No. 48162)
16. Retail Market Value of the Right to use a Motor Vehicle (Gazette No. 38744)
17. SARS Travel eLogbook
18. SARS Tax Statistics 2022 – PIT Tables
PAGSA Information Documents (Newsflashes and Proposals)
19. PAGSA NF 2016-31 Change to Code 4582 for 2016 Mid-year Submissions
20. PAGSA NF 2017-19 Code 4582 and PAGSA AGM Follow-up
21. PAGSA NF 2017-21 Code 4582 and SARS Final Notice
22. PAGSA NF 2022/13 – Rate per kilometer: 2023 Tax year
23. PAGSA NF 2023-07 Payroll Tax Amendments for 1 March 2023
24. PAGSA Annex C 2022 11 – Proposals for Legislation changes
25. PAGSA Comments 2012 05 Allowances Draft Int Note
26. PAGSA Comments 2012 05 Company Car Draft Int Note
1.2 Terminology Conventions used in this Workbook
To keep the wording in this workbook short and simple, the following terminology conventions have been used:
• All references to ‘he’ or ‘his’ includes ‘she’ or ‘her’ in the case of a female taxpayer, and ‘it’ or ‘its’ in the case of a taxpayer other than an individual and is not intended to be discriminatory.
• Tax year (of an employee) is used instead of ‘year of assessment’ and refers to the period of 12 months or shorter from March to February during which an employee was employed and remunerated.
• In the Income Tax Act, reference to a person includes both natural and non-natural persons.
• The term Travel Reimbursement is used in this workbook but is referred to in the legislation and SARS publications as a Reimbursive Travel Allowance
• The term Company car is used instead of ‘company motor vehicle’ as referred to in the legislation
• The term ‘employee’s tax’ is used instead of ‘PAYE’.
The following abbreviations might be used in this workbook –
• ITA Income Tax Act
• TLAA Taxation Laws Amendment Act
• TALAA Tax Administration Laws Amendment Act
• SDLA Skills Development Levies Act
• UICA Unemployment Insurance Contributions Act
• ETIA Employment Tax Incentive Act
• BCEA Basic Conditions of Employment Act
• LRA Labour Relations Act
• EEA Employment Equity Act
• UIA Unemployment Insurance Act
• UICA Unemployment Insurance Contributions Act
• COIDA Compensation for Occupational Injuries and Diseases Act
• PAGSA Payroll Authors Group of South Africa