Allowances and Fringe Benefits: How They're Taxed

Your salary isn't always just cash. Many South Africans receive part of their package as allowances or benefits — a travel allowance, a company car, a housing or cellphone allowance — and these are where payslips get confusing, because they're often taxed differently from ordinary salary.

The general principle is that SARS treats most of what you receive from your employer as taxable, whether it arrives as cash or as a benefit in kind. But the way it's taxed varies.

A travel allowance is a common example. It's paid in cash, but only a portion is typically subjected to PAYE up front, on the assumption that some of it will be spent on legitimate business travel — which you later prove (or don't) with a logbook when you file your return. Keep a logbook if you get a travel allowance; without one, you can't claim the business portion and may have overpaid.

A company car is a fringe benefit — you don't receive cash, but you receive the use of an asset, and SARS puts a taxable value on that use, which is added to your income and taxed. Similar logic applies to other benefits: the value of the benefit is worked into your taxable income.

Because allowances and benefits interact with your return and sometimes require record-keeping to get the tax right, they're a common source of payslip confusion and year-end surprises. Our calculator works on your basic taxable salary; if a large part of your package is allowances or benefits, your actual PAYE may differ, and it's worth understanding each component with your payroll department or a tax practitioner.

This is general information, not tax advice. To estimate PAYE on your basic salary, use the calculator.