Module 4: Allowances Flashcards
What are the 2 kinds of travel allowance?
Fixed and reimbursive
What is the difference between fixed and reimbursive travel allowance?
Fixed- a monthly amount is paid regardless of actual travel
Reimbursive - allowance is paid back based on actual business km traveled
What is the taxable amount formula for FIXED travel allowance?
Gross allowance- business expenditure
What is the DEEMED method for calculating FIXED business expenditure?
Actual business km traveled during YOA x deemed rate/km
What is the ACTUAL method for calculating FIXED business expenditure?
Actual business km traveled during YOA x actual rate/km
If a taxpayer gets an allowance on the same company car they have right of use over, will there be Rnil travel allowance?
No - the taxable amount will be the full travel allowance and the right of use will still be a taxable benefit.
What is deemed to be the cost of business expenditure for REIMBURSIVE allowance?
Cost per table of rates (provided in exam)
When will a taxpayer be allowed to deduct a fixed rate per business km?
If:
. Total business km < 12,000 in total AND
. No other travel allowance is received
Note: only for fixed allowance.
True or false: always use the higher of actual or deemed cost.
True, to maximise the deductions a taxpyer can claim.
True or false: The deductions against the subsistence allowance can only be claimed where an employee was
responsible for the costs.
True.
What business expenditure has no table of deemed rates?
Accommodation. Taxpayers must keep records of this.
Remember the structure of these allowances:
Step 1: Allowance is received
Step 2: records are kept or not
Step 3.1: if records are kept, actual costs are determined and deducted from the allowance (that was included in taxable income)
Step 3.2: if no records were kept, deemed costs are deducted from the allowance
