New rules in South Africa require PAYE (pay as you earn) withholding on any travel reimbursement to employees, calculated at a rate higher than the prescribed rate.
Therefore, effective 1 March 2018, an employee will pay tax upfront under the PAYE withholding process on reimbursive travel allowances, if the employees are reimbursed at a higher rate. The prescribed rate per kilometre is currently R3.61 per kilometre.
Under the new rules, the South African Revenue Service has allocated new payroll codes, and these codes have been incorporated into payroll software by the payroll authors.
Employers will need to update their policy and procedure documentation to incorporate the new codes when reimbursive travel allowances are paid to employees.
Read an April 2018 report [PDF 140 KB] prepared by the KPMG member firm in South Africa
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.