What counts as a subsistence allowance?
A subsistence allowance is paid to an employee who is obliged to spend at least one night away from their usual place of residence in the Republic on business. It is governed by section 8(1) of the Income Tax Act. Its purpose is to cover meals, incidental costs (laundry, tips, private calls) and, where applicable, accommodation.
It is not a travel allowance. A travel allowance compensates an employee for using their own vehicle and is reported under different source codes — see our PAYE calculator and the payroll glossary for the distinction.
SARS deemed daily amounts (2026/27)
Where the allowance does not exceed the deemed amounts below, no PAYE is withheld and no receipts are required for the daily spend:
R169 / day
Incidental costs only
R548 / day
Meals and incidental costs
A country-specific daily amount applies, published annually by SARS in the Government Gazette (for example, a materially higher daily amount for the United Kingdom than for a neighbouring SADC country). Look up the destination country before processing the payslip.
SARS confirms these amounts each year. Always check the current gazette before your first payroll run of a new tax year — the local figures above apply to the 2026/27 year of assessment.
When does a subsistence allowance become taxable?
- The employee did not spend a night away from home — the full amount is taxable.
- The allowance exceeds the deemed daily amount — only the excess is taxable.
- The allowance is paid as a general monthly amount unrelated to actual trips — SARS treats it as remuneration.
- Actual costs are reimbursed on top of a full deemed allowance for the same day — the duplication is taxable.
The most common audit finding is a "subsistence allowance" paid every month to staff who never travel. SARS reclassifies it as salary, raises PAYE, and adds penalties and interest on the underpaid EMP201s.
How to record it on the payslip
Add the allowance as a separate payslip line — never bundle it into basic salary. Split the line where an amount exceeds the deemed rate, so the non-taxable and taxable portions carry the correct source codes:
| Source code | Use it for |
|---|---|
| 3704 | Local subsistence allowance — taxable portion |
| 3714 | Local subsistence allowance — non-taxable portion |
| 3715 | Foreign subsistence allowance — taxable portion |
| 3716 | Foreign subsistence allowance — non-taxable portion |
Impact on the EMP201 and IRP5
The non-taxable portion is excluded from remuneration, so it does not affect the PAYE, UIF or SDL totals on your monthly EMP201. Any taxable excess is added to remuneration and therefore increases PAYE and SDL, and UIF up to the monthly earnings ceiling. At year end the amounts must appear against the correct codes on the employee's IRP5 or your EMP501 reconciliation will fail validation.
Practical checklist for employers
- Write a travel policy stating the daily amounts you pay and that they apply only to overnight business trips.
- Capture the trip dates, destination and business purpose for every allowance paid.
- Split taxable and non-taxable portions on the payslip using codes 3704/3714 (or 3715/3716).
- Check the SARS gazette at the start of each tax year for updated local and foreign daily amounts.
- Reconcile allowances to the EMP501 before submitting — mismatched source codes are the top rejection reason.
Frequently asked questions
What is a subsistence allowance in South Africa?
A subsistence allowance (also called an S&T allowance) is an amount an employer pays an employee who must spend at least one night away from their usual place of residence on business. It covers meals, incidental costs and accommodation. It is dealt with under section 8(1) of the Income Tax Act and is not the same as a travel (kilometre) allowance, which covers the use of a vehicle.
What are the SARS deemed daily amounts for subsistence in 2026/27?
For travel inside South Africa SARS allows a deemed amount of R169 per day for incidental costs only, or R548 per day where the allowance covers both meals and incidental costs. For travel outside South Africa a country-specific daily amount published in the annual SARS gazette applies. Amounts are confirmed each year in the Government Gazette, so always check the current SARS table before your first payroll run of the tax year.
Is a subsistence allowance taxable?
It is not subject to PAYE at the time of payment provided the employee is genuinely away overnight on business and the allowance does not exceed the deemed daily amounts. Any portion above the deemed amount, or any allowance paid where the employee did not sleep away from home, is taxable and must be included in remuneration for PAYE.
Which SARS source codes are used for subsistence allowances?
Use code 3704 for a local subsistence allowance that is taxable (above the deemed amount) and 3714 for the non-taxable portion of a local allowance. Foreign travel uses 3715 (taxable) and 3716 (non-taxable). Getting these codes right matters because the IRP5 and EMP501 reconciliation are validated against them.
Does a subsistence allowance affect UIF, SDL or the EMP201?
The non-taxable portion is excluded from remuneration, so it does not increase PAYE, and it does not form part of the UIF or SDL calculation. Any taxable excess is included in remuneration and therefore increases the PAYE, SDL and (subject to the monthly ceiling) UIF figures reported on the EMP201.
Do employees need to keep receipts for a subsistence allowance?
Not for the deemed daily amounts — that is the point of the deemed rates. Employers must, however, be able to prove the business trip took place (dates, destination, business purpose) and that the employee slept away from home. If you reimburse actual costs instead of paying the deemed amount, receipts are required.