Travel and other allowances
TAX 242
2024
, Allowances
• An allowance is an amount of money that an employer gives an employee in order to in
business related expenses, but the employee is not obliged to prove or account to the
employer for the expenditure.
• A taxpayer must include all allowances received from employment as part of his or her
taxable income.
• If the taxpayer used part or all of the allowance for business purposes, he or she may de
the expenses from the allowance received.
• However, where an employer reimburses an employee for expenses actually incurred o
employer’s behalf, these amounts will not be included as part of the employee’s taxable
income.
, Allowances (s 8(1))
• An amount paid as reimbursement or advance is not included in the recipient’s taxab
income if it will be used
– for expenditure incurred or to be incurred by him
– on the instruction of his principal in the furtherance of the principal’s trade, and
– if the recipient is required to account to his principal for the expenditure incurred an
must provide proof that the expenditure was wholly so incurred (s 8(1)(a)(ii)).
• Where the expenditure is incurred to acquire an asset, the ownership of the asset mu
vest in the principal. ‘Principal’ is defined in s 8(1)(a)(iii) and includes an employer, as w
the authority, company, body or other organisation in relation to which an office is held
any associated institution in relation to the aforementioned
TAX 242
2024
, Allowances
• An allowance is an amount of money that an employer gives an employee in order to in
business related expenses, but the employee is not obliged to prove or account to the
employer for the expenditure.
• A taxpayer must include all allowances received from employment as part of his or her
taxable income.
• If the taxpayer used part or all of the allowance for business purposes, he or she may de
the expenses from the allowance received.
• However, where an employer reimburses an employee for expenses actually incurred o
employer’s behalf, these amounts will not be included as part of the employee’s taxable
income.
, Allowances (s 8(1))
• An amount paid as reimbursement or advance is not included in the recipient’s taxab
income if it will be used
– for expenditure incurred or to be incurred by him
– on the instruction of his principal in the furtherance of the principal’s trade, and
– if the recipient is required to account to his principal for the expenditure incurred an
must provide proof that the expenditure was wholly so incurred (s 8(1)(a)(ii)).
• Where the expenditure is incurred to acquire an asset, the ownership of the asset mu
vest in the principal. ‘Principal’ is defined in s 8(1)(a)(iii) and includes an employer, as w
the authority, company, body or other organisation in relation to which an office is held
any associated institution in relation to the aforementioned
