JHB 
South African employers are under increasing pressure to keep payroll practices watertight. SARS has sharpened its audit tools with enhanced data-matching, AI-driven risk profiling, and a far more aggressive stance on corporate compliance. For businesses, this means that mistakes—or worse, deliberate shortcuts—are bound to surface sooner rather than later.
Whether out of habit, bad advice, or the urge to cut costs, payroll errors can leave a company vulnerable to penalties, interest charges, and reputational harm. Below are some of the most common pitfalls currently drawing SARS’s attention.
Payroll red flags every employer should watch for
Fuel cards not taxed correctly
Fuel cards are convenient, but they also create compliance risk. If a company card is used for any personal element—fuel, maintenance, tyres, or servicing of a privately owned vehicle—the related cost must be treated as a taxable fringe benefit. Many employers overlook this, exposing themselves to significant backdated PAYE liabilities.
Misuse of subsistence allowances
Subsistence allowances are meant to cover incidental expenses when staff travel for business. They are not a free pass to provide tax-free perks. Red flags include:
- Paying allowances while all travel costs are already covered by the employer.
- Treating recurring monthly payments as “subsistence”.
- Exceeding SARS thresholds without justification.
This practice is viewed as an attempt to avoid legitimate taxation—and is a surefire audit trigger.
Company vehicles not reflected on payroll
If an employee is given a company car that can also be used privately (including commuting), it must be taxed as a fringe benefit. Omitting or inconsistently treating this benefit is a high-risk mistake that can quickly lead to a SARS reassessment.
Arbitrary travel allowances
SARS no longer accepts travel allowances granted purely by grade or seniority. Employers must demonstrate:
- That business travel is required as part of employment;
- That the allowance reflects actual or expected mileage; and
- That employees maintain SARS-compliant logbooks.
Unsubstantiated allowances are highly likely to be reclassified as taxable income in full.
The danger of ignoring historical non-compliance
A common misconception is that older payroll mistakes eventually “expire.” They don’t. In cases involving misrepresentation, fraud, or non-disclosure, SARS has no time limit for reassessing prior years. A missed fringe benefit or misapplied allowance from years ago can resurface with compounded penalties and interest.
The role of the Voluntary Disclosure Programme (VDP)
If you suspect past non-compliance, the Voluntary Disclosure Programme offers a critical opportunity to rectify issues before SARS initiates an audit. Benefits include:
to SARS.
penalties.
Resolving historic risk across all affected years and tax types.
Timing is everything—once an audit has started, VDP is no longer an option. Acting quickly could mean the difference between a manageable outcome and severe financial exposure.
The smarter approach: get proactive
Hoping SARS won’t notice is not a strategy. With compliance technology more advanced than ever, it’s only a matter of time before errors are picked up. If you are concerned about potential exposures for your business, reach out to your MMS payroll lead to identify weaknesses, correct historic problems, and tighten payroll systems going forward.