Subsistence Allowance (International/Local)
A subsistence allowance is any allowance given 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.
SimplePay has built-in items to accommodate the special tax and reporting requirements related to international and local subsistence allowances.
To add a subsistence allowance:
- Go to an employee’s profile.
- Click on Add (next to Payslip Inputs).
You can then select one of the following:
Subsistence Allowance International¶
This item should be used where the accommodation to which the allowance or advance relates is outside the Republic of South Africa ("the Republic").
SARS prescribes an amount that is deemed to be expended for each day (or part of a day) that is spent in another country. A complete list of countries and amounts deemed to have been expended can be found on the SARS website under Foreign.
After going to Add (next to Payslip Inputs) > Subsistence Allowance International, you have to enter the following:
- Total Paid to Employee: This is the total amount of the allowance or advance that was paid to the employee.
- Maximum Daily Deemed Amount: This amount must be calculated with reference to the deemed amount found on the above-mentioned website.
- Number of days: Enter the number of days that were spent outside the Republic.
Important - Maximum daily deemed amount
If the subsistence allowance for foreign travel set out by SARS is in a foreign currency (i.e. not RSA Rand), the exchange rate at the time of paying the allowance to the employee should be used to calculate the maximum daily deemed amount.
Please see the example below:
For this example, let's assume the following information:
- Total paid to the employee: R6 000
- Maximum deemed daily amount: R1 714.50 - The employee went to China, and the deemed daily amount is $127. Using $1:R13.50 as the exchange rate, 127 × 13.50 = 1 714.50.
- Number of days: 3
This will be reported as follows:
- Code 3714 Other allowances (Non-Taxable): R5 143 – calculated as 1 714.50 × 3 = 5 143.50, with the fifty cents being dropped.
- Code 3715 Subsistence allowance – foreign (exceeding deemed amount): R856 – calculated as 6 000 – 5 143.50 = 856.50, with the fifty cents being dropped.
Subsistence Allowance Local¶
This item should be used where the accommodation to which the allowance or advance relates is in the Republic.
Every year, the Finance Minister announces the amounts deemed to be expended, and these are published on the SARS website. There are different daily amounts for incidental costs only, and for meals and incidental costs.
After going to Add (next to Payslip Inputs) > Subsistence Allowance Local, you have to enter the following:
- Costs for Reimbursement: Select either “Incidental Costs Only” or “Meals & Incidental Costs”.
- Full Amount Paid to Employee: This is the total amount of the allowance or advance that was paid to the employee.
- Number of days: Enter the number of days that were spent away from the employee’s usual place of residence, in the Republic.
Please see the example below:
For this example, let's assume the following information:
- Costs for reimbursement: Meals & Incidental Costs
- Full amount paid to employee: R4 000
- Number of days: 7
This will be reported as follows:
- Code 3714 Other allowances (Non-Taxable): R2 779 – calculated as 397 (deemed amount example) x 7.
- Code 3704 Subsistence allowance – local (exceeding deemed amount): R1 221 – calculated as 4 000 – 2 779.
Note
If an employee earns foreign service income and receives a subsistence allowance, there are some differences in the taxable income calculation and SARS tax codes. Please see the FAQ below for more information.