Are travel allowances still beneficial when compared to company cars?

Abstract

During his 2004 Budget speech the Minister of Finance said the following: 'I am concerned about the tax loss associated with travel allowances. In the coming year, we plan to review the taxation of the motor vehicle allowances and the ad valorem duty structure on motor vehicles.' A year or two later, during his 2005 and 2006 Budget speeches, far-reaching amendments to the taxing provisions of company vehicles and travel allowances were suggested. The bulk of the changes to the taxing provisions of travel allowances were dealt with in the Taxation Laws Amendment Act 9 of 2005 that was promulgated on 19 July 2005. The Revenues Laws Amendment Act 31 of 2005 was promulgated on 1 February 2006 and contained the rest of the amendments with regards to travel allowances and company cars. A brief overview of these latest changes will firstly be provided before the comparison between the different benefits will be discussed.