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Subsistence, Travel Allowance Policy in South Africa

December 17, 2022 Jeremiah Amosu Southern Africa , South Africa 0

• Allowances in South Africa are granted to employees by their employers either to take care of future expenses or reimburse them for costs incurred while working.

Subsistence, travel allowance policy in South Africa are key areas of taxation in South Africa, especially for the fact that they are types of allowances.

Subsistence, Travel Allowance Policy in South Africa : General Perspective

Subsistence and Travel Allowances both have their features and are liable to taxation in certain instances while in some they are not.

Let’s do a proper breakdown of these allowances and enlighten you on how they work.

What is a Subsistence Allowance?

A subsistence allowance is a fixed amount provided to an employee or a holder of any office for expenses incurred in respect of personal subsistence and incidental costs such as meals and drinks.

SARS’ Deemed Costs For Subsistence Allowances

It is important to note that the South African Revenue Service (SARS) has a set deemed rate for meals and incidental costs for local travel which is applicable per night the employee spends away from home.

If you select the deemed rate set by SARS, it is not necessary to provide proof of what you have spent.

They also have a fixed daily amount for business travel outside of South Africa, which varies from country to country.

This brings us to Subsistence Allowance for both International and Local travel.

Subsistence Allowance International

This allowance applies in a situation where the accommodation to which the allowance relates is outside the Republic.

SARS specifies an amount that is deemed to be spent for each day that is spent in another country.

Log on to the SARS website and go to “Foreign” to view a complete list of countries and amounts deemed to have been expended.

Subsistence Allowance Local

This allowance applies in a situation where the accommodation to which the allowance or advance relates is in the Republic.

Every year, the Finance Minister discloses the amounts deemed to be spent and these are disclosed on the SARS website.

How A Subsistence Allowance Is Taxed

The tax is usually imposed on any amount that wasn’t spent while on a business trip and not returned to one’s employer.

It is usually assessed once you submit your annual tax return for assessment.

Tax-Free Subsistence Allowance

A tax-free subsistence allowance simply means that the allowance amount that you received from your employer is equal to the SARS deemed rate and therefore it is regarded as tax-free.

In other words, after deducting the SARS deemed rate from the allowance amount you received, there will be nothing left to tax.

Therefore, you don’t need to submit any supporting documentation and you also can’t make any claims against this allowance on your tax return.

Taxable Subsistence Allowance

If your employer repays you an amount that is higher than the SARS deemed rates for the expenses incurred, then it’s a taxable subsistence allowance.

This means that it will be indicated with the source code 3704 for local trips and/or 3715 for foreign travel.

Now that we’ve expatiated Subsistence Allowance and explained their taxation pattern, let us move on to Travel Allowance.

What is a Travel Allowance?

Travel allowance is any allowance given to an employee in respect of traveling expenses for business purposes.

A travel allowance should only be given to an employee where that employee is expected to use their private vehicle for the employer’s business.

It is risky for travel allowances to be paid to employees, not for commercial reasons, but only for tax reasons.

Note that the employee doesn’t need to own the vehicle that they are travelling in before they can receive a travel allowance, as long as it is being used for the employer’s business.

Usually, the allowance is paid in two forms:

1. It is either set at a specific amount per pay period or;

2. Reimbursed to an employee for actual business kilometers travelled, according to either the SARS deemed rate or as determined by the employer.

Reimbursive Travel Allowance

Most employers prefer to reimburse their employees rather than set an amount because there is no guarantee that the employee will spend the whole amount while on business travel.

Employers should reimburse their employees at a rate below the SARS prescribed rate of R 3.82 per kilometer so that it will not attract PAYE and will also not be taxable on the employee’s tax return.

Taxation for Travel Allowance

Taxation for travel allowance operates on the assumption that an allowance is included in a person’s taxable income to the extent that the allowance has not been spent on business travel.

The general position is that private travel is taxable and business travel is not taxable.

Where an employee is reimbursed using a rate higher than the SARS deemed rate, the disparity between the SARS deemed rate and the rate used by the employer will be liable to employees’ tax (PAYE).

This is done irrespective of the number of business-related kilometers traveled.

There are two inclusion rates for purposes of deducting employees’ tax (PAYE), namely 80% or 20%.

Unless the employer is convinced that at least 80% of the use of the motor vehicle that the employee is receiving a travel allowance for is business related, the basic withholding rate is 80%.

When the employer is convinced though, the inclusion rate is only 20%.

However, employers opt for a 100% withholding rate when they realize that the employee will not spend much of their travel allowance on business travel.

Business Travel and Private Travel

When an employee receives a travel allowance, it is usually spent on either business travel or private travel, even though they are both business related.

There are two options available to determine the business travel deduction on assessment.

1 . Where an employee has kept a detailed logbook of the business kilometers traveled during the tax year.

2 . Where an employee does not keep records of actual business traveling. In this case, the first 18,000 kilometers traveled in the tax year will be considered to be private travel, while the subsequent 14,000 kilometers will be deemed to be business travel.

It is important to note that travel between home and work is regarded as private travelling and kilometers travelled more than 32 000 will also be considered to be private.

In conclusion, both subsistence and travel allowance are granted by employers in South Africa to help employees take care of expenses such as food, drinks, accommodation, travel, etc.

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Patient Assistance Transport Scheme's fuel subsidy doubles

The fuel subsidy for the Patient Assistance Transport Scheme – called PATS for short – has doubled from 16c to 32c per kilometre, effective for appointments from 1 January 2023.

PATS provides financial assistance towards people’s transport and accommodation costs when they’re required to travel more than 100km each way to access necessary medical specialist services that are not available locally.

Barry's story

Barry is a Riverland local - he's lived in Waikerie all his life.

An unexpected diagnosis left Barry and his wife facing a long round-trip to Adelaide each fortnight for specialist care.

"That's where the PATS scheme did come in and became very, very helpful to us. There was available finance for travel...knowing there is some money out there to support you - it helps."

"There was available finance for travel...knowing there is some money out there to support you - it helps."

What is PATS?

PATS is a subsidy program funded by the Government of South Australia and administered through the six regional local health networks by the Rural Support Service in SA Health.

PATS can contribute to the cost of your accommodation and travel, including air travel authorised by your specialist if required.

How do I make a claim?

The PATS online portal is quick and easy to use – login or register to make your claim.

Make sure you have an email address and your Medicare number handy.

Paper-based PATS forms are still available if you need them and can be accessed as PDFs for printing yourself.

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To the extent any recommendations or statements of opinion or fact made in a story may constitute financial advice, they constitute general information and not personal financial advice in any form. As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of readers.

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Travel Insurance For South Africa: Everything You Need To Know

Updated: Apr 30, 2024, 1:13pm

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Do I Need Travel Insurance for South Africa?

What does travel insurance for south africa cover, frequently asked questions (faqs).

Tourism is on the rise in South Africa according to the local government , with more than four million tourists visiting the nation in the first half of 2023 alone. Australians form a sizable chunk of those numbers, with an estimated 125,000 Australians touring the country each year pre-pandemic.

With travel still high on the agenda for many Australians, that figure is expected to rise in the coming years.

If you’re considering a trip to South Africa, you’ll want to purchase travel insurance. Our guide explains everything you need to know.

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Yes, Australians should purchase travel insurance for South Africa. While not a legal requirement to enter the country, it is highly recommended from the Australian government—especially for medical care.

The standard of medical facilities in South Africa can vary by region, but medical facilities are generally of a much lower standard than Australia. In fact, many regional hospitals only provide basic facilities, meaning you may have to be relocated in order to receive the right medical attention.

There is no shared healthcare agreement between Australia and South Africa, which makes travel insurance even more essential. If you need to be transferred by air evacuation to a major city in order to receive treatment, and you don’t have travel insurance, you’ll likely face a hefty bill out of your own pocket.

As Smartraveller advises all Australians, if you can’t afford travel insurance, you can’t afford to travel.

Vaccinations to Consider for Your Trip to South Africa

There is a high risk of certain diseases in South Africa, so it is worth making sure your vaccinations are up to date before you travel and taking any preventative measures with you, such as medications.

This can help reduce your chances of needing to seek medical attention.

There is a risk of Hepatitis A and B throughout South Africa, so vaccinations for Australian travellers are recommended. There is also a moderate risk for most travellers of typhoid, so a vaccination is also recommended if you are travelling to smaller cities, villages and rural areas.

Malaria is present throughout the country, so it could be a good idea to equip yourself with malaria tablets before you travel.

It is essential that you consult a medical practitioner regarding your need for vaccinations before you travel to South Africa, especially as some medical conditions can predispose travellers to certain infections.

When purchasing a travel insurance policy for South Africa, you will have the option to choose a basic policy or a comprehensive policy. A basic policy is cheaper , but may turn out to be more expensive in the long run if you aren’t covered for the things you need.

While a basic policy will usually cover medical needs, it may not provide cover for things such as lost luggage and cancellations (or, if it does, will provide it at a much lower claim level).

That’s why a comprehensive policy is highly recommended for travel to South Africa, as you will receive cover for stolen items, lost luggage, delays and more, in addition to medical and emergency dental care.

Smartraveller asks Australians to exercise a high degree of caution due to the threat of violent crime in South Africa, which includes robbery and carjacking.

The government website warns that opportunistic criminals will target travellers at the approaches to tourist-hotspot Kruger National Park, at well-known resorts, and on public transport.

Additionally, as ATM and credit card fraud are common crimes in South Africa, a comprehensive policy can be the more financially sound choice to give you peace of mind.

Going on a Safari?

South Africa is a popular tourist region for many reasons, including wildlife safaris. If you wish to partake in a safari or a game walk—walking with wild animals and a professional guide—you will need to ensure that these activities are covered in your policy’s list of included sports and activities.

If they are not, you will not receive cover for anything that occurs during the safari.

However, your policy may offer the option for you to choose an ‘adventure pack’ at an additional cost, which can include many activities that aren’t covered in the standard offering.

This can also include hiking or trekking to certain altitudes.

It’s important to consider which activities you may be participating in during your trip to South Africa in order to ensure you have the appropriate coverage, and purchase an additional add-on if necessary.

What Travel Insurance Won’t Cover

Your travel insurance policy won’t cover anything that is set out in its exclusions, as per the product disclosure statement (PDS). This could include certain sports and activities (such as a safari), or travel to certain regions in South Africa due to safety.

While each travel insurance policy differs on the fine-print, it is standard for most policies not to cover:

• Cancellations due to ‘disinclination to travel’, being if you change your mind about your holiday;
• Accidents or injuries that occur when not following the appropriate safety guidance or official guidelines;
• Intoxicated behaviour, including recreational drugs;
• Any illegal activity.

Be sure to carefully read the PDS of your policy so you know exactly what you can and cannot claim on your trip to South Africa.

Is it safe to travel to South Africa?

Smartraveller recommends that Australians exercise a high degree of caution when travelling to South Africa, due to the threat of violent crime. This includes armed robbery, mugging, carjacking, credit card theft, and more.

There is a higher risk of violent crime in major cities after dark, or during “rolling blackout” periods.

For these reasons (and more), Smartraveller urges Australians to take out a travel insurance policy before travelling to South Africa.

Do Australians need a visa for South Africa?

No, Australians do not need a visa for South Africa if they are visiting for tourism for stays of up to 90 days.

Where can I buy travel insurance for South Africa?

Most Australian travel insurance providers will cover Aussies wanting to head abroad to South Africa. When shopping around for a policy, you will be able to choose your destination when you request a quote. If there is no option to choose South Africa, this would be a clear indicator that the insurance provider does not provide policies to this region.

At the time of writing, a few of our top picks for comprehensive travel insurance cover South Africa, including Allianz and Cover-More .

Travel insurance providers can revoke the issuing of new policies to certain destinations at any time, especially if Smartraveller changes the alert warning for a country to ‘Do Not Travel’.

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Sophie Venz is an experienced editor and features reporter, and has previously worked in the small business and start-up reporting space. Previously the Associate Editor of SmartCompany, Sophie has worked closely with finance experts and columnists around Australia and internationally.

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If your business is in rural or regional South Australia, you can access allowances for travel and accommodation associated with hiring an apprentice or trainee.

This allowance is a contribution only and is not intended to cover the total travel and accommodation costs.

If the round trip from your apprentice’s home to the nearest training location is more than 150km, you’re likely to be eligible.

Before applying for the allowance, check attendance requirements outlined by the training provider, and read the guidelines below to check your apprentice or trainee is eligible.

Guidelines - Travel and Accommodation Allowance (PDF)

Start your application below.

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