Calculating a travel deduction if you are in receipt of a travel allowance
The Income Tax Act allows taxpayers who receive a travel allowance to claim a deduction for the use of their private vehicles for business purposes. It is important to note that travel between your home and place of work cannot be claimed and is regarded as private travel.
In order to claim a deduction, the first step is to record your vehicle’s odometer reading on 1 March each year (the first day of the tax year for individuals), and again on the last day of February the following year (the last day of the tax year for individuals). The difference between the closing and opening readings will give you your total kilometres travelled for the year.
Without these readings, you cannot claim a tax deduction!
Once you have taken down these readings and worked out your total travel for the year, you can start calculating your travel deduction. First you need to calculate what portion of the total kilometres travelled was for business use.
It is now compulsory to keep a logbook of all your travel in which you record your business kilometres if you want to claim a travel deduction. The logbook must contain the following minimum information relating to your business travel:
Date of travel
Travel details (where to and reason for the trip)
Note: Where you used more than one vehicle in the tax year, a separate logbook must be kept for each vehicle that was used.
Without a logbook, you will not be able to claim a travel deduction.
You are now ready to calculate the amount of your claim.
You can calculate your claim based on the actual costs. You will have to have kept an accurate record of all your expenses during the year, including fuel, maintenance, lease and insurance costs.
Please note that you must retain your logbook for a period of at least five years as you may be required to submit it to NAMRA for verification of your claim.
NAMRA reserves the right to audit and query the content or information recorded by the taxpayer in any logbook.
Where an allowance or advance is based on the actual distance travelled by the employee for business purposes, no tax is payable on an allowance paid by an employer to an employee.
However, this alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking) is received from the employer in respect of the vehicle.
Company Cars Employees may also be entitled to claim a reduction on the fringe benefit in respect business mileage travelled in motor vehicles provided by an employer.
In order to claim such a deduction, an accurate record of mileage travelled is required. This logbook may also be used for this purpose. The same minimum information as set out above is also required for company cars.
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 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.
PRIMARY INFORMATION TO BE FURNISHED BY A TAXPAYER AS REQUIRED BY NAMRA:
Opening kilometers at the beginning of the year of assessment
Closing kilometers at the end of the year of assessment
DAILY BUSINESS TRAVEL RECORDS: Kilometre Recording Total - *Opening *Closing Kms
Total Business Kms
Business Travel Details - *To *From *Reason
Actual Fuel & Oil Cost
Actual Repairs & Maintenance Cost
Use the logbook as a source of information when compiling your Income Tax Return. Submit your completed Travel Logbook together with all other supporting documents on ITAS.
DOWNLOAD THE TRAVEL LOGBOOK TEMPLATE