Many businesses pay employees some form of an allowance either as part of an industrial agreement or as an agreement with an employee. Allowances include items such as meals, dirt, height and first aid allowances.

As a general rule, allowances are taxable. This includes allowances such as a uniform allowance, laundry allowance, tool allowance and meal allowance. An allowance is usually a set amount that is provided to the employee without any supporting invoices.

Please refer to the checklist of taxable items for further guidance on the types of payments that are subject to payroll tax.

There are 2 types of allowances that only become taxable when they exceed a certain amount (referred to as the exempt component). These are the:

Reimbursements are not taxable as they are a business expense not a wage payment. Reimbursements occur when an employee pays for something but they are then repaid the exact amount based upon a receipt.

Information Circulars and Revenue Rulings

Information Circulars and Revenue Rulings include decisions on the interpretation of legislation administered by RevenueSA and of changes in administrative practices or taxation laws.

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