Mileage Compliance in South Africa
In South Africa, there are two ways to compensate employees for using their vehicle for business journeys:
- Rate per kilometre: reimbursement of an employee based on actual business travel
- Travel allowance: an allowance given to an employee to finance transport, usually a set rate or amount per pay period
Rate per kilometre
The tax-free rate per kilometre for the period from March 1, 2023, to April 30, 2024, is set at 464 cents (ZAR) per kilometre (compared to the previous rate of 418 cents per kilometre for the period of March 1, 2022, to April 30, 2023). This rate is established by the South African Revenue Service (SARS), and you can find more details in their official document here.
You can only use this rate-per-kilometre simplified method where no other allowance or advance and no other compensation in the form of a further allowance or reimbursement (other than for parking or toll fees) in respect of the vehicle is paid by the employer to the employee
You can reimburse employees more than this rate, but where the reimbursed rate exceeds the prescribed rate, irrespective of the business kilometres travelled, there is an inclusion in remuneration for PAYE purposes.
Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the following table applicable from 1 March 2023 to 30 April 2024 (as published in the Government Gazette 3 March 2023):
|Where the value of the vehicle –||Fixed cost (ZAR)||Fuel cost (c/km)||Maintenance costs (c/km)|
|does not exceed ZAR100 000||33 760||141.5||43.8|
|exceeds ZAR100 000 but does not exceed ZAR200 000||60 329||158.0||54.8|
|exceeds ZAR200 000 but does not exceed ZAR300 000||86 958||171.7||60.4|
|exceeds ZAR300 000 but does not exceed ZAR400 000||110 554||184.6||65.9|
|exceeds ZAR400 000 but does not exceed ZAR500 000||134 150||197.6||77.5|
|exceeds ZAR500 000 but does not exceed ZAR600 000||158 856||226.6||91.0|
|exceeds ZAR600 000 but does not exceed ZAR700 000||183 611||230.5||102.1|
|exceeds ZAR700 000 but does not exceed ZAR800 000||209 685||234.3||113.1|
|exceeds ZAR800 000||209 685||234.3||113.1|
Notes about the travel allowance:
- 80% of the travelling allowance must be included in the employee’s remuneration to calculate PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
- No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle, and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).
- The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.
- The actual distance travelled during a tax year, and the distance travelled for business purposes, substantiated by a log book, are used to determine the costs which may be claimed against a travelling allowance.