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As South African taxpayers prepare for the upcoming changes in tax legislation, those who depend on travel allowances or claim mileage deductions for work-related journeys should pay close attention. The South African government has introduced new kilometre-based reimbursement rates under the Income Tax Act of 1962. These revised rates, outlined in the Government Gazette No. 52199, have been officially announced by Finance Minister Enoch Godongwana and will be implemented for tax years commencing on or after March 1, 2025.
Understanding the New Mileage Rate Calculation
The newly established rates will affect not only individuals who receive travel allowances or reimbursements from their employers but also those who claim business-related travel expenses. The mileage rate per kilometre will be calculated based on the following components:
- Fixed Cost – Determined by the vehicle’s value.
- Fuel Cost – Adjusted according to the cost incurred per kilometre.
- Maintenance Cost – Encompassing routine servicing, repairs, and tire replacements.
The calculation adheres to a cost scale that varies depending on the vehicle’s value. For example:
- A vehicle valued at R100,000 or less will qualify for:
- A fixed cost of R33,940,
- Fuel cost of 146.7 cents/km,
- Maintenance cost of 47.4 cents/km.
- For vehicles valued at over R800,000, the fixed cost is capped at R211,121, with a fuel cost of 242.9 cents/km and maintenance cost of 122.5 cents/km.
Additionally, those who do not receive supplementary compensation beyond their travel allowance can choose a flat reimbursement rate of 476 cents per kilometre, eliminating the need for itemized calculations.
Implications for Taxpayers
For South Africans utilizing personal vehicles for professional purposes, these updates could considerably affect tax deductions and reimbursements. Both employers and employees must review the modified rates thoroughly to ensure compliance while maximizing tax efficiency.
According to a representative from the South African Revenue Service (SARS), “The updated mileage rates reflect rising vehicle ownership costs, including fuel and maintenance. The goal is to offer fair and accurate reimbursement for business-related travel.”
Preparing for the Upcoming Changes
Taxpayers should take proactive steps to adapt to these changes effectively:
- Maintain Accurate Travel Logs: If you are claiming a travel allowance, keep detailed logbooks differentiating between business and personal mileage for precise tax submissions.
- Evaluate Your Reimbursement Method: Determine whether the standard rate of 476c/km or the detailed cost breakdown is more advantageous for your situation.
- Update Employer Payroll Systems: Businesses must revise payroll calculations to align with the new SARS guidelines.
Final Thoughts
The revised mileage reimbursement rates are designed to ensure that individuals using their vehicles for work are fairly compensated for wear-and-tear, fuel, and related expenses. Taxpayers are encouraged to consult with a tax professional or accountant to fully grasp the implications of these changes and optimize their tax strategy.
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