Travel Allowance Tax in South Africa (2026/2027)
A travel allowance is a taxable benefit paid by an employer for the use of a private vehicle for business. SARS allows employees to reduce the taxable portion by claiming a deduction for business kilometres.
The deemed cost method uses the SARS cost scale for the value of your vehicle. Divide the fixed cost by all the kilometres you drove in the year, then add the fuel cost if you paid for all your fuel and the maintenance cost if you paid for all your maintenance. That rate times your business kilometres is your deduction. The actual cost method uses what the car really cost you, in the same business share. Compare both and use the lower taxable amount.
Frequently Asked Questions
What is the deemed cost rate?
It depends on the value of your car and how far you drove. For a R350 000 car driven 25 000 km a year it is R7.49 per km for 2026/2027.
What is the simplified rate?
R4.95 per km for 2026/2027. It applies only when your employer reimburses you for business kilometres actually travelled and pays nothing else towards the car apart from parking and tolls. A monthly travel allowance uses the deemed or actual cost method instead.
When should I use actual cost?
When the business share of what the car actually cost you is more than the deemed cost deduction. You need receipts for every cost you claim.
What records do I need?
A logbook recording business km, total km, dates, destinations, and purpose of each trip.
Is a travel allowance taxable?
Yes, but you can deduct the business-use portion. The difference is what gets taxed.
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