OFFICE MEMORANDUM

CONSULTING ENGINEERS (PTY) LTD

TO : All CBI Staff FROM : MT Franklin

DATE : 30 March 2010 REF : OFFGEN - Travel Claims

SUBJECT : SARS CHANGES TO TRAVEL ALLOWANCES AND TRAVEL CLAIMS

Dear Colleagues

Please note that, with effect from 1 March 2010, SARS have made statutory changes that affect, amongst
other things, PAYE deductions on Travel Allowance payments. These changes are summarised in the
attached VIP Payroll notice, and affect all persons receiving a Travel Allowance as part of their Total
Package.

Effectively, the taxable portion of the Travel Allowance will increase to 80% (currently 60%), and it will be
up to the Taxpayer to reclaim any overpayment in tax at the end of the financial year, once the Taxpayer
submits his/her ITR12 Tax Return.

In addition, in order to claim business travel expenses, an individual must keep a logbook from March
2010. An example of a logbook is attached. You will not be able to claim any business travel deductions
if you do not keep a logbook.

As an alternative, provided the distance travelled for business purposes does not exceed 8000km, and
only if the employee does not receive a Travel Allowance, SARS will allow an employer to reimburse an
employee for business travel at a rate of 292 cents per kilometre, with no tax deducted or payable,
regardless of the value, or engine capacity, of the vehicle used. This tax free alternative is not available if
any other travel allowance or reimbursement is received from the employer.

If you do receive a Travel Allowance, you may claim reimbursement for project related travel, where this
travel is also recovered from the project. You will be reimbursed at a rate equivalent to 90% of the
kilometre rate charged to the project by CBI. This reimbursement will be taxable, and tax will be deducted
before it is paid to you. Please note that business travel not recovered from a project will not be
reimbursed, and this travel will be deemed to be covered by your travel allowance. You will, of course, be
entitled to record this business travel on your logbook for tax purposes.

Please note that the current standard rate recovered by CBI for a 1500cc (up to 1999cc) motor vehicle is
R3,35 per kilometre, and an employee will be reimbursed for the business use of such a vehicle at 301,5
cents per kilometre, with tax deducted and payable. Higher rates are applicable for motor vehicles
above 2000cc. It should be noted that not all project travel is recovered at standard CBI rates; in
particular, travel on PWD projects is recovered at rates prescribed on the PWD website.

Employees who currently have a Travel Allowance as part of their Total Package should determine what
their total annual business travel is likely to be, and decide if they would like to retain this Travel
Allowance, or be reimbursed at the tax free rate of 292 cents per kilometre.

Kind regards

MT Franklin
MTF/mtf/Travel Claims.doc