A subsistence allowance is paid to an employee who is away from home overnight for business, to cover meals and incidental expenses. It is meant to reimburse the extra cost of being on the road, not to provide additional pay.
What it means
SARS publishes deemed daily amounts for meals and incidentals, locally and abroad. Where the allowance is for a qualifying away-from-home night and does not exceed the deemed amount, it is not subject to PAYE. Amounts above the deemed figure, or paid where no overnight stay was required, become taxable.
Where it fits in
A subsistence allowance is an earnings component, but one that can be paid free of PAYE within the deemed limits. It is reported under its own IRP5 source codes so SARS can check it against the days the employee was actually away.
Key rules
- Covers meals and incidentals when away from home overnight on business.
- Free of PAYE up to the SARS deemed daily amounts.
- Taxable above the deemed amount or where no overnight stay applied.
- Reported under its own IRP5 source codes.
