aa rate of travel per km

What are the AA Rates per KM in South Africa

Several taxpayers are still unsure of how the calculation of the reimbursement for business miles traveled is done, even though the tax filing season is still open until 24 October 2022 for non-provisional taxpayers and until 23 January 2023 for provisional taxpayers.

The term “travel allowance” refers to any payment made to or advance granted to an employee in connection with travel costs for professional purposes.

Essentially, two eventualities are covered by the legislative framework:

• A travel reimbursement is paid to an employee based on actual business travel.
•  In contrast, a travel allowance is given to an employee to finance transportation and is typically a set rate or amount per pay period.

Knowing the differences is crucial because the aforementioned are taxed differently. The updated rate per kilometer for motor vehicles is announced in a Government Gazette each year following the budget address.

Rates per kilometer are calculated using the following table (as published in Government Gazette No. 46015 of March 8, 2022), which may be used to assess the permitted deduction for business travel against an allowance or advance where real costs are not claimed:

AA Rates Per KM

With the streamlined method, a fixed rate per kilometer is used, and the employee is not given any further remuneration from the business (aside from parking or toll payments) in the form of an advance, additional allowance, or reimbursement.

The mandated rate, sometimes referred to as the AA rate per kilometer, is R4.18 for the tax year 2022–2023. The authorized rate of reimbursed travel expenses is not taxed. Regardless of the number of business miles traveled, compensation is included for PAYE purposes if it exceeds the mandated amount of R4.18 per kilometer. Unlike the fixed travel allowance, where only 80% of the amount is due to PAYE, the full inclusion amount is liable to PAYE.

How do I Calculate my Car’s fuel economy?

If you are aware of the distance traveled and the amount of fuel required to cover that distance, calculating your car’s fuel consumption is simple. These are the steps you must take.

• Fill up your petrol tank.
• Note the mileage that is now showing on your odometer. Set the trip odometer on your automobile to zero if it has one.
• Drive your vehicle generally until you require another fill-up.
• Fill the fuel tank when it is empty and keep track of your fuel consumption.
• To find out how far you’ve traveled since your previous fill-up, use your trip odometer. To calculate how far you have traveled without a trip odometer, note the most recent odometer reading and subtract the previous reading.
• Divide the total distance traveled by the total amount of gasoline consumed to find the number of kilometers your automobile can travel on one liter of petrol. Example: 400 km divided by 42 liters equals 9.5 km per liter.
• By multiplying the gasoline consumption by 100 and dividing it by the total number of miles travelled, you can calculate your car’s fuel efficiency (Metric System). For instance, 10.5 liters every 100 kilometers = 42 liters x 100 / 400.

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FIXING OF RATE PER KILOMETRE IN RESPECT OF MOTOR VEHICLES FOR THE PURPOSES OF SECTION 8(1)(b)(ii) AND (iii) OF THE INCOME TAX ACT, 1962

Prescribed rate per kilometre: 

The prescribed rate per kilometre used for reimbursive travel allowance for 2022/2023 has increased from R3.82 to  R4.18

Vehicle lookup table for the purpose of calculating a travel allowance (deemed cost rate per kilometre on assessment): 

Click here to read the Gazette: Government Gazette 46015

[email protected] | 0861 000 234

0861 000 234 | [email protected]

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Do you know the cost of your vehicle?

Dec 7, 2020 | Press releases

Do you know how much it costs to keep your car on the road every day? Or, more precisely, do you know how much your car costs you daily, even when it is parked in the garage over weekends? It is important for all vehicle owners to understand that the cost of owning a vehicle goes far beyond only the cost of fuel.

Too many people assume the cost of the vehicle is the repayment of the loan (if they have one), and the cost of fuel. But, in reality, the cost of vehicle ownership extends further, and vehicle owners must know exactly how much they are spending on their cars, and where it is going.

In a recent survey, we sent out to our Members on vehicle ownership costs, almost 40 percent of those polled said they don’t know how much it costs to own and run their cars every month. This despite the fact that the most common issues affecting motorists are rising fuel costs, maintenance costs, and unexpected repair expenses.

There are many variables which determine the amount of money spent on a vehicle daily, weekly, monthly and annually. It is important for vehicle owners to understand these variables and, if necessary, manage them better to ensure they do not overspend on their vehicles. The key to reducing total cost of ownership of a vehicle goes beyond simple managing fuel consumption.

The type of car you drive, how you drive, the fuel you use (and where you fill-up), the tyres you use, the terrain you drive on, the kilometres you drive daily, weekly, monthly and annually, and the insurance cover you have on the vehicle are just some of the factors you need to consider when calculating the true cost of keeping your car on the road.

Things such as maintenance and service plans, installment payments, and unexpected expenses such as cracked windshields and windows (which, for a small number of owners is covered by insurance, but even this may require excess payments), should also be factored into the total cost of ownership of a vehicle.

If, for instance, your drive a small sedan at the coast, the total AA rate calculated on the vehicle may be R 3,35 per driving kilometre which amounts to R 67 000 if you drive 20 000 km a year. An SUV driven inland over the same distance is going to be markedly more expensive – around R 137 000 per year, or R 3,75 per day. But, importantly, this doesn’t only cover the cost of fuel, it also covers all costs associated with keeping the car on the road. People working on a budget, especially in these tough economic times, must keep a track of these expenses to ensure their vehicle is adequately covered financially at all times.

Too many motorists or motorcyclists only factor in their fuel costs when calculating how much their vehicles cost them monthly. This leaves these road users financially exposed as they may not be setting enough money aside for emergencies.

Owning a vehicle has many associated costs. If you own a car or motorbike, make sure you calculate all the variables such as tyres, services, insurance, and, in the case of motorbikes – replacement gear – into your monthly budget. Doing this will give you a more accurate picture of the cost of owning the vehicle, even when it is not being used.

Owning a vehicle requires planning for once-off expenses such as tyres and maintenance. If you haven’t planned for these expenses, they will seem expensive, especially if the costs are higher than you expect.

Part of planning for an annual vehicle budget is tracking current expenses by category such as tyres, maintenance and fuel. This will allow you to budget future expenses based on historical data of your usage.

Even though it may seem like a lot of work, knowing exactly how much you are spending on your vehicle – even when it is in your garage – is important to managing your vehicle’s expenses properly and, if needed, altering certain elements such as your routes and driving habits, to mitigate the impact of rising costs.

Take the time to look at where you can make any savings, and do what you can to bring costs down. Even small savings build up over time and may save you thousands of rands in the long run.

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Our trip fuel cost calculator will tell you how much it will cost you to drive over a certain distance, based on the current fuel price, your vehicles fuel efficency and the distance you need to travel.

How to use our trip fuel cost calculator

We’ve made it easy to see how much a trip will cost you if you drive. Simply enter the distance you need to drive (in kilometres), you vehicles fuel efficiency (in litres per 100km) and the current fuel cost per litre. The calculated results will tell you how much fuel you will use for the trip and how much the trip will cost you in total.

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Forum fuel and economy mileage rates for business purposes.

Hi there, I have been using my car for business purposes. My employee contract states "You may be required to use your own personal vehicle to attend client meetings and will be reimbursed for mileage at the standard legislative rate required". As such, I have claimed for expenses at the IRD standard rate of 77c. My employer has told me that they will only reimburse at a rate of 62c. They said this is based on an average of rates compiled from Public service, AA and IRD and that they 'exclude the depreciation component of the allowance as we do not reimburse for the capital cost, only the operating costs.' Is this correct? I called the IRD and they said it should be 77c but wanted to check with AA too. Your advice is much appreciated.

As you say, the IRD rate is 77c per km, however the AA rates are also acceptable to the IRD, but are calculated on the type of vehicle. Hence, a small car up to 1.5 litre is 53.2c per km and the rate goes up depending on the car to $1.07 per km for a large car over 3.5 litres. All our rates include capital outlay and depreciation, which are major components in the running of a vehicle. However, none of these rates are set in stone or are legislated as to what an employer should reimburse an employee - that comes down to a negotiation between the parties, although I would have thought this should be agreed upon up front.

Hi ABayliss, thank you for your quick reply. Would you be able to tell me what mileage rate would apply for a Peugoet 206 Wagon 1.6 litre? Is there a calculation that can be used to work out the depreciation / capital outlay component? Thanks again for your help

The AA rate for this car would be 64c per km. However, our rates are based on a car at the 3rd year of age where depreciation is a significant component. On a 10 or so year old car such as your 206, it would be much less, so the 62c per km your employer is paying is quite generous. The other factor to consider is that the IRD rate of 77c per km (across all makes, models, ages and engine sizes) is capped to 5,000km per year and requires keeping a log book, receipts etc. The AA rates have less constraints as we have calculated them out to be quite accurate. Personally, I'd be more than happy with 62c per km on your car as it probably exceeds the real running cost.

Thanks ABayliss - you have put the issue to rest in my mind.

HI, I understand the 5000km cap with the IRD is only for self-employed, but if its for reimbursing an employee there is no cap and it continues at 77cents?

The IRD rate (ie; for tax purposes) is capped at 5,000km. Reimbursement between an employer and an employee is a separate matter and can be negotiated between both parties at any rate the parties settle on. It could well be 77c per km but not necessarily.

South Africa Mileage

Compliance > South Africa > Mileage

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Please be aware that this resource is informational only, and many external factors, unique to your company might apply. Each company must make their own decisions about how they meet their tax obligations.

Rate per kilometre

Travel allowance, mileage compliance in south africa.

In South Africa, there are two ways to compensate employees for using their vehicle for business journeys:

• Rate per kilometre:  reimbursement of an employee based on actual business travel
• Travel allowance:  an allowance given to an employee to finance transport, usually a set rate or amount per pay period

The tax-free rate per kilometre for the period from 1 March 2024, to 28 February 2025, is set at 484 cents (ZAR) per kilometre ( previous rate for the period of 1 March 2023, to 29 February 2024: 464 cents per kilometre). This rate is established by the South African Revenue Service (SARS), and you can find more details in their official document here .

You can only use this rate-per-kilometre simplified method where no other allowance or advance and no other compensation in the form of a further allowance or reimbursement (other than for parking or toll fees) in respect of the vehicle is paid by the employer to the employee

You can reimburse employees more than this rate, but where the reimbursed rate exceeds the prescribed rate, irrespective of the business kilometres travelled, there is an inclusion in remuneration for PAYE purposes.

Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the following table applicable from 1 March 2024 to 28 February 2025 ( as published by SARS ):

Notes about the travel allowance:

• 80% of the travelling allowance must be included in the employee’s remuneration to calculate PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
• No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle, and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).
• The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.
• The actual distance travelled during a tax year, and the distance travelled for business purposes, substantiated by a log book, are used to determine the costs which may be claimed against a travelling allowance.
• Find the rates for the previous year here .

Last changed 2024-02-23

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Don’t let uncertainty hold you back – click on the link below to calculate your vehicle rates now. Empower yourself and become a savvy AA Namibia member, ensuring every trip is as smooth on your wallet as it is on the road. Let’s embark on this financial road trip together! Calculate your rates today and experience worry-free driving.

Click on the link below to access the AA Rates Calculator.

https://aa.co.za/vehicle-rates-calculator/

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Also gives a rough estimate when claiming mileage from Company or an Organisation when one has used their own vehicle on Company business.

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