This week, in the last of an eight-part series on taxation of fringe
benefits and allowances, we`ll talk about subsistence and entertainment
allowances.
Your employer may give you a subsistence allowance if you have to spend one
night or more away from your home as part of your job. If your employer
gives you no more than R150 a day to pay for accommodation and meals while
you are away working, that amount, up to R150, is effectively tax free.
Alternatively, your employer might pay your accommodation and give you R65
a day for other costs. That amount, up to R65, is effectively tax free.
This allowance is attractive because even if food costs you R75 a day (say
your employer pays for accommodation) and you received R80 a day, you can
still claim the R5 difference even if the amount you receive exceeds the
limit you can be paid. With most other allowances, it is not as easy to
claim expenses in excess of the allowance received.
Entertainment allowances are given to you as a salary for entertaining
clients on behalf of your employer. When you prepare your tax return, you
will have to provide details of the people you entertained and how much you
spent, before any expense is allowed. If you are an ordinary employee, the
maximum deduction you can claim is the lowest of the following:
Actual expenditure;
R2 500;
The allowance itself; or
R300 plus five percent of the taxable income from employment exceeding R6 000.
If most of your income is in the form of commission, for instance, (for
example, if your remuneration depends on the number of clients you bring to
your employer), these limits don`t apply.
Most people who receive commission normally also have to work from home and
if they have set aside rooms for doing their work, a portion of home loan
repayments, insurance, home repairs and so on will be allowed as a
deduction from income.
This claim is not available to people who work primarily from their offices.
Other allowances - computer, cell-phone and so on - will all be taxed
during the year and you will have to provide proof at the end of the tax
year when you complete your tax return.