Tax and SARS knowledge base
Relocation costs an employer can reimburse without PAYE
Which relocation costs can an employer reimburse without PAYE?
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Direct answer
Specified relocation costs may be reimbursed without PAYE where an employee changes residence because of a transfer, appointment or termination of employment. SARS's employer guide lists qualifying categories, including transport of the employee, household and possessions, sale and settling-in costs, temporary accommodation that ends within 183 days, and certain actual-cost reimbursements.
The exemption is evidence based. A flat cash allowance is not automatically exempt, and a move that does not involve a change of residence does not qualify. An employer should identify each cost, confirm the employment event and residence change, and retain invoices or other support before putting it in an exempt payroll category.
What this means in practice
The purpose of the payment matters. An employee may move to take up an appointment, because of a work transfer, or after employment ends. The supporting file should explain which event occurred, the former and new residence, the work location and the date of the move. A commute, a temporary travel arrangement or a move without an actual change in residence should not be labelled as an exempt relocation reimbursement.
SARS includes the transport of the employee, household and belongings as well as listed sale and settling-in expenses. The guide also refers to actual reimbursements for certain expenditure, including bond fees, transfer duty, school uniforms, curtains, vehicle registration and utility connections. The word "actual" is important. It is prudent to collect the invoice, proof of payment and a short explanation of the link to the relocation.
Temporary accommodation has a stated time limit. SARS includes it among qualifying transfer costs only where it ends within 183 days. Do not treat an open-ended rental or ongoing housing benefit as an exempt relocation item merely because it began when an employee moved. Long-term housing can have a different payroll treatment.
Step-by-step
- Confirm the qualifying employment event.
Obtain the appointment, transfer or termination letter. Record why the employer is paying relocation costs and the relevant dates.
- Confirm that residence changed.
Keep evidence of the old and new residence and the move date. A change of workplace without a residence change does not fall within the transfer-cost exemption described by SARS.
- Create a cost schedule.
List every claimed item separately. Identify transport, household removals, sale expenses, settling-in costs, temporary accommodation and any specific actual-cost reimbursement. Do not process a total allowance without this detail.
- Test the evidence and limits.
Match each item to the SARS category and retain the invoice, receipt and payment proof. For temporary accommodation, record start and end dates and confirm that it ended within 183 days.
- Process qualifying and non-qualifying items separately.
Use the exempt payroll treatment only for supported qualifying items. Route amounts that do not meet the conditions for taxable-remuneration or fringe-benefit review before payment.
- Reconcile and retain the file.
Reconcile the relocation schedule to payment records and payroll entries. Keep the employee tax-certificate and payroll support consistent with the classification actually used.
Documents and records to keep
Keep the appointment, transfer or termination letter, old and new address evidence, relocation policy, cost schedule, supplier invoices, receipts, proof of payment, accommodation agreement and dates, payroll calculation and employee tax-certificate support. These records should be held in the normal employer record-retention file.
Important limits and exceptions
This is not a blanket exemption for anything an employee spends when changing jobs. The employer must show a residence change connected to appointment, transfer or termination. Certain listed items depend on actual expenditure, and temporary accommodation has a 183-day ending requirement.
Do not assume that a cash payment becomes exempt after the employee supplies a broad estimate. A fixed allowance, an amount that covers personal spending, or an ongoing accommodation arrangement may have different treatment. Where an employer reimburses a combined invoice, isolate the supported qualifying portion before payroll processing.
When to get tailored advice
Get tailored advice for international moves, director relocations, sales of property, ongoing accommodation, large household payments, mixed reimbursements or any arrangement that includes cash instead of documented actual expenditure.
TaxProof can help prepare a relocation schedule and evidence file. We cannot classify an unusual reimbursement or calculate a related accommodation benefit without the complete agreement and costs.