Page 234 - SAIT Compendium 2016 Volume2

IN 13 (3) Income Tax acT: InTeRPReTaTIon noTes IN 14 (3)
Result:
For purposes of section 23(m), the employee will be permitted to claim the amount of the bonus actually repaid (in this case, the amount of R50 000) against his or her taxable income on assessment for normal tax in the 2009 year of assessment.
INTERPRETATION NOTE: NO. 14 (Issue 3) Allowances. Advances and Reimbursements
DATE: ACT: SECTION: SUBJECT:
CONTENTS
Paragraph
Preamble
20 March 2013
INCOME TAX ACT 58 OF 1962 (the Act)
Sections 8 (1)(a); 8 (1)(b) and 8 (1)(c) and paragraph 1 of the Fourth Schedule Allowances, advances and reimbursements
Title
1. Purpose
2. Background
3. The nature of allowances, advances and reimbursements
3.1 De nition of the terms ‘allowance’, ‘advance’ and ‘reimbursement’ for the purposes of section 8 (1) 3.1.1 Allowance
3.1.2 Advance
3.1.3 Reimbursement
3.2 General observations on the nature of allowances, advances and reimbursements
4. The law
5. Application of the law
5.1 Inclusion in taxable income – allowances and advances
5.1.1 The terms ‘principal’ and ‘recipient’
5.2 Exclusion from taxable income – reimbursements and advances
5.3 Deductions from subsistence allowances
5.3.1 General
5.3.2 Actual method 5.3.3 Deemed method 5.3.4 Examples
5.4 Deductions from travelling allowances and advances 5.4.1 General
5.4.2 Kilometres
5.4.3 Expenditure per kilometre – actual costs
5.4.4 Expenditure per kilometre – deemed rate per kilometre
5.5 Deduction under section 11 (a)
6. Employees’ tax
6.1 General
6.2 Subsistence allowances
6.3 Travel allowance and reimbursive travel claims
6.3.1 Travel allowance
6.3.2 Reimbursive travel claim
7. Conclusion
Annexure A – The law
Annexure B – Table of rate per kilometre
Preamble
In this Note, unless the context indicates otherwise –
• ‘section’ means a section of the Act; and
• any word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides clarity on the tax treatment of allowances, advances and reimbursements granted to employees and of ce holders and gives guidance on the record-keeping requirements relating to motor vehicles.
The Note updates and replaces Issue 2 which was published on 8 January 2008 and incorporates relevant legislation changes up to and including the Taxation Laws Amendment Act No. 22 of 2012.
226 saIT comPendIum oF Tax LegIsLaTIon VoLume 2