TAX TREATMENT OF SUBSISTENCE AND TRAVEL ALLOWANCE
This Practice Note serves to clarify the tax treatment of subsistence and travel allowance based on Schedule 2 and Section 14 of the Income Tax Act No 24 of 1981.
THE LAW
Schedule 2 of the Income Tax Act No 24 of 1981 ('the Income Tax Act") directs that employees' tax (PAYE) be deducted by employers from remuneration. The definition of remuneration in Paragraph 1 of Schedule 2 of the Income Tax Act includes any allowance but excludes any amount paid or payable to any employee wholly in reimbursement of expenditure actually incurred by such employee in the course of his
or her employment. Section 14 (1) of the Income Tax Act provides that any allowance not expended for travelling or other services shall be deemed to be part of taxable income of the recipient.