Subsistence Allowance for Foreign Travel

When an employee travels abroad for business purposes, they may incur various expenses such as accommodation, meals, and incidental costs. To simplify the reimbursement process, the South African Revenue Service (SARS) provides guidelines on subsistence allowances for foreign travel.

What is a Subsistence Allowance?

A subsistence allowance is an amount paid by an employer to an employee to cover daily expenses incurred while travelling for work. This allowance is not subject to tax up to certain limits set by SARS.

SARS Guidelines on Subsistence Allowance for Foreign Travel

SARS publishes a list of daily allowance amounts for different countries, covering:

• Meals and incidental costs – A fixed daily amount to cover food and small daily expenses.
• Incidental costs only – A lower fixed amount for expenses such as tips, telephone calls, and minor purchases.

Tax Implications

• If the subsistence allowance does not exceed the SARS-prescribed rate, it is not taxable.
• Any amount paid above the prescribed rate is considered a taxable benefit and must be included in the employee’s income.
• If an employee claims actual expenses instead of using the fixed allowance, they must provide supporting documents such as receipts.

How to Claim a Subsistence Allowance

Employers typically include the allowance in the employee’s payroll. Employees should ensure they comply with company policies regarding business travel and keep records where necessary. For the latest allowance rates and more information, contact PRNC today.