S8 Allowances

RECOGNITION:Leanie groenewald
 Framework
DESCRIPTION SECTION AMOUNT
Gross Income – general and special inclusions 1 xxx
Plus: Deemed inclusions 7, 8(4)(a) xxx
Less: Exempt Income 10, 10A-10C,12T (xxx)
INCOME XXX
Less: Deductions (except 11(k) and 18A) 11-19,24, 23(m) (xxx)
Less: Assessed Loss 20, 20A (xxx)
Add: Other inclusions in taxable income 8 xxx
Net
Sub-Total amount XXX
Add: Taxable Capital Gain 26A xxx
Less: Retirement Funds 11F (xxx)
Sub-Total XXX
Less: Donations to PBO 18A (xxx)
TAXABLE INCOME 1 XXX
Normal Tax payable according to scale 5 XXX
Less: Primary, Secondary and Tertiary rebates 6(2) (xxx)
Less: Medical Credits 6A, 6B (xxx)
NORMAL TAX 2 XXX
 S8 Allowances

Travel allowance (s8(1)(b))

Subsistence allowance (a8(1)(c)

Reimbursive:
* Not included in taxable income Fixed (pre-paid):
s8(1)(a): Total allowance
1. Instruction employer - Greater of actual/deemed cost
2. Trade = Included in taxable income
3. Proof of purchase Net
allowance
included
 8.3.1 Travel allowances – s8(1)
• An employer can pay two types of travel allowance to
employees :
 A fixed travel allowance – receive the same amount
monthly.
 Reimbursive travel allowance or advance based on actual
business KM travelled.
• Employees must add the above allowance to taxable
income and calculate the allowable deduction for number
business KM travelled.
• Travel reimbursement paid by an employer are deemed
Keep
to accrue to a recipient on the date that they are paid. logbook all
the time.
 s8(1)(b)
Allowance less
FIXED ALLOWANCE BUSINESS cost
– deemed cost
* Deemed cost (if full cost paid by employee):

Calculate cost from scale:

- fixed cost (fixed cost/ total km) x days/365

- fuel Appendix C:
Fixed cost = R
- maintenance Fuel/maintenance = c
Logbook for
actual kms Actual business km x deemed cost per km
Why?
• Value of vehicle: Original cost (incl VAT & excl finance charges)
• Acquired ito lease agreement: cash value
• Any other case: use MV (incl. VAT) on date obtained
 Appendix c

VALUE OF THE FIXED FUEL COST MAINTENANCE COST

VEHICLE (R) COST (R) (c/km) (c/km)
0 - 95 000 29 504 104.1 38.6
95 001 - 190 000 52 226 116.2 48.3
190 001 - 285 000 75 039 126.3 53.2
285 001 - 380 000 94 871 135.8 58.1
380 001 - 475 000 114 781 145.3 68.3
475 001 - 570 000 135 746 166.7 80.2
570 001 - 665 000 156 711 172.4 96.6
more than 665 000 156 711 172.4 96.6
 Reimbursive travel allowance
• Reimbursement travel allowance or advance is based upon the actual
business KM already travelled by the employee.
• It is paid out at the employer-agreed rate per KM.
 Travel allowance: exceptions
If an employee receives the right to use a vehicle (par 7) AND a travel
allowance on the same vehicle

• FULL travel allowance is included in taxable income

• Right of use is taxed ito par 7 – par 7(7)&(8) reductions allowed

If an employee/spouse/child lets the vehicle to the employer

and right of use is granted to the employee

• Rental and other costs paid by employer = deemed travel allowance

• Deemed rental not received (no s11(a))
• Right of use (par 7) is ignored (deemed travel allowance)
 s8(1)(c)
14.4.2 SUBSISTENCE ALLOWANCE
When employee is required to spend at least 1 night away
from his usual place of residence in SA for business purpose
Cost paid by
employee
Must have
Subsistence allowance proof
Less: Greater of actual/deemed cost
= included in taxable income
Ltd to R0

Deemed cost:
Meals & incidental: R452 per day Travel in SA
Incidental only: R139 per day
Meals & incidental outside SA: see Appendix H
• “Day” includes part of a day (1 night = 2 days)
Only actual costs can be deducted for accommodation
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