What is the expenses and reimbursement process in South Africa? What about per diems?

In South Africa, employees can claim reimbursement for work-related expenses, which are typically tax-free when properly documented. Per diems, or subsistence allowances, provide a convenient way to cover daily expenses while traveling for business, with rates set by SARS to ensure they are reasonable. When used within the prescribed limits and for legitimate business purposes, per diems are not subject to taxation, making them an efficient tool for managing travel costs. 


Expenses:

  • Reimbursement:
    Employees can claim reimbursement for costs incurred during work-related activities, such as travel, accommodation, and other business expenses. To qualify for reimbursement, employees must provide valid receipts and ensure that the expenses are directly related to their work duties.

  • Tax Implications:
    Reimbursed expenses are typically tax-free as long as they are properly documented and connected to legitimate business activities. This means that if an employee submits accurate receipts and the expenses are clearly related to work, they won’t face additional tax on the reimbursed amount.


Per Diems (Subsistence Allowance):

  • Purpose:
    Per diems are daily allowances provided to employees to cover expenses incurred while traveling for work, such as meals, accommodation, and incidentals. These allowances help simplify expense management by providing a fixed amount rather than requiring detailed receipts for every small expense.

  • Rates:
    Per diem rates are set by the South African Revenue Service (SARS) and vary depending on the location and nature of the travel. These rates are designed to cover the reasonable costs associated with business travel, ensuring that employees have sufficient funds to manage their daily expenses.

  • Tax Implications:
    Per diems are generally not taxed if they are used for business purposes and stay within the limits established by SARS. This means that as long as the per diem amount does not exceed the allowable limits and is used appropriately, employees will not incur additional tax liabilities on these payments.

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