Travel Allowance

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What Is The Definition Of A Travel Allowance?

A travel allowance is any payment or advance made to an employee for business-related travel expenditures.

In terms of travel allowance, the following two scenarios are considered :

  • A payment made to an employee depending on their actual travel; and
  • Travel allowance provided to an employee to help pay for transportation (ex. a fixed rate or amount every pay month).

Any reimbursement or advance for travel expenditures not used for business travel is considered to have been used for personal travel. (Including travel between the employee’s home and work).

What Is A Fixed Travel Allowance?

A fixed travel allowance is a payment made to an employee for business travel expenditures.

These sums are usually included in the pay package for employees. (weekly, biweekly, monthly, etc.)

What Is A Reimbursive Travel Allowance?

A reimbursable travel allowance is one that is calculated according to the actual distance traveled for business purposes (with the exception of private travel).

These payments are usually calculated by multiplying the actual business kilometres travelled by a rate per km and is then paid to an employee by the company.

Taxation Of Employees :

Fixed Travel Allowance – Employees’ taxes are deducted from just 80% of the set travel allowance.

Reimbursive Travel Allowance – It’s possible that the reimbursement allowance is taxable or non-taxable.

 Non taxable business travel up to 12 000 km at the Minister of Finance’s set tariff per km;and is taxable above 12 000 km business travel per tax year.

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