Travel allowances and PAYE
ID:18CVTRAV

Video Overview

Salaried and waged employees all pay a prepaid tax called Pay As You Earn or PAYE. Their employers are responsible for calculating the PAYE, deducting it from their pay, and then paying it over to the SARS on behalf of the employees. The PAYE deduction on the pay slip is calculated by first calculating PAYE remuneration, then converting it to an annual equivalent, and then based on this annual amount calculating the annual tax liability based on the current year’s tax tables and rebates. This annual amount is then converted back to a monthly or weekly amount, whichever is relevant. In this tutorial we will focus on travel allowances and PAYE remuneration. A travel allowance is a monthly cash consideration paid by the employer to the employee to compensate the employee for using his private car for business purposes. Instead of a travel allowance, the employee could be given the sole use of a company car. In this case a fringe benefit arises as it is a non-cash consideration.