Travel allowances system to be scrapped
Treasury has proposed that the current system of travel allowances be scrapped by 2011. More than 500 000 taxpayers claim travel expenses for business every year.
Treasury says that the current system of "deemed business kilometres" distorts household purchasing decisions because the deductions do not always match actual business expenses.
"Under the current system, the default practice is to claim private kilometres travelled as business travel. This "cannot be justified from an equity perspective", notes Treasury.
It says the "deemed business kilometres" system is "one of the few remaining salary structuring methods to reduce tax liability".
"Taxpayers who are required to use their personal vehicles for business purposes will still be able to keep a logbook to claim business travelling expenses," it notes.
Write to Julius Cobbett: julius@moneyweb.co.za
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