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We really could write a book! Believe it or not, this article is about subsistence allowances.

And yes, we were once sent a business claim for an out of town visit which included toothpaste, cotton wool and dental floss… All bought in South Africa before the trip…..

Hence our response, “You were going to brush your teeth, anyway”.

He was quite taken aback.


We assumed he thought incidental meant something to do with teeth....

Discussing this with some business associates, they trumped this story with the guy whose dog became extremely stressed when his master travelled and the company was asked to pay for dog psychology treatments.

Over the years we have looked at how other companies manage out of country/out of town expenses.

Some give a baseline - you can’t spend more than x and you need to validate all your expenses.

Others give a value, often in line with revenue service guidelines, and no slips are necessary.

The question is whether travelling should be income producing for the traveller? Or is a travel allowance merely intended to cover your costs, as well as pay you an inconvenience allowance?

After all, travelling can be seen as a benefit.


Of course, there are incidental costs that you would not have incurred had you not been on a business trip e.g. tips, private phone calls, room service, laundry. Not to mention gifts for your children and spouse which they anticipate as their inconvenience allowance for your being away.

The reality is that, in most cases, a subsistence allowance is not danger pay nor is it a standby allowance.

However, there are issues that need to be addressed if your job includes travel and these need to be dealt with at the outset.

Some companies consider the personal time you use for ad hoc travelling to be part of the deal, others might offer a financial or non financial compensation. This is more common when travelling is a regular part of the position i.e. weekly.

Some will consider additional household expenses that you only incur when travelling e.g. pets that need to be housed in kennels for the duration of the trip, or child care. Once again, it’s really important that these things are considered, and that your questions are covered early in the discussions for the role.

What is allowable in terms of taxation is a topic for another day, however the links below cover the current South African legislation and some interpretations of it.

When your business requires employees to travel, it is worth spending the time to draw up a structured policy of what is and isn’t acceptable, and make it very clear whether or not you cover deodorant and toothpaste that are used in other countries!







Links, References and Notes




Accsys provides people management solutions ie Payroll, Human Resources (HR), Time and Attendance as well as Access Control/Visitor Management.

The company develops, implements, trains and services our solutions. We provide readers, turnstiles, booms and CCTV.

We run both on premise and in the cloud, as well as mobile options for ESS. Recruitment, online education and Business Process Outsourcing (BPO) are part of our offering, too.

www.accsys.co.za

http://www.accsys.co.za/accsys-peopleplace-talent-management

email: tschroenn@accsys.co.za

twitter: @TerylSchroenn




http://www.sars.gov.za/AllDocs/OpsDocs/Guides/PAYE-GEN-01-G03%20-%20Guide%20for%20Employers%20in%20respect%20of%20Allowances%20-%20External%20Guide.pdf

SARS Definition: A subsistence allowance is any allowance given to an employee or a holder of any office for expenses incurred or to be incurred in respect of personal subsistence and incidental costs (for example, drinks).

http://www.hrworks.co.za/articles/89-subsistence-allowance

Subsistence allowance recognizes the fact that when you are away from home on business, that there are expenses that you incur but you cannot claim for on your tax return.

The intention of a subsistence allowance is to reimburse you for such costs. A subsistence allowance that is paid at the correct rates is tax-free. However there are a number of buts

https://www.taxtim.com/za/blog/food-for-thought-on-subsistence-allowances

The 2016/2017 tax year daily rates are:

Local:

Meals and incidental costs - R372

Incidental costs only - R115




Note: Thank you for reading Teryl@Work. Should you wish to use any of the material, please acknowledge this blog as the source.
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