You have to deal with a lot of expenses when working as a sole proprietor or operating a full-fledged company in South Africa. Dealing with tax returns can be one of the most hectic things for a business. Taxes should be considered as perks because they help you claim deductions.
If you deal with your tax returns and are unaware of what expenses can be claimed back from SARS, refer to my article. The information is gathered after thorough research and help from an expert. You can claim back all the expenses that have been incurred for the business.
A list is given below so you can claim refunds to reduce the tax for next year. Go through the details to see if you can take advantage of this opportunity and apply for a tax rebate this year.
You can claim benefits as a South African citizen who has a document to support all his affairs. All the paperwork along with the important documents shall be put together before the end of the tax season. As a taxpayer, you can claim multiple benefits and refunds from SARS.
Saving For Retirement
If you contribute to a provident fund or retirement fund, you can claim a tax deduction during the tax year. As an employee, you can get a tax deduction of at least 27% of your total income. This amount won’t be greater than the contributions that you have made during the past years.
For instance, if you earn a total of R 228 000 annually and pay R 2375 monthly for the provident/retirement fund, you will end up saving a good amount at the end of that year. As an employee, you can get this amount deducted from the tax as it will be less than 27%.
This can be of great benefit as you will be able to live your life comfortably in those years coming ahead. All your savings can be utilized in that golden time of your life if you fall into the tax threshold table. You must have enough proof and documents to support your claims from SARS at the end of the tax year.
As an employee, you apply for retirement funds through your employer. The contributions from your salary will be noted on IRP5 which is sufficient on your tax return to claim benefits. In case your employer does not offer any retirement fund, get your hands on the RAF Contribution Certificate as proof of your contributions.
All taxpayers can claim medical expenses that are set against the person’s tax liability. The chances of getting the rebate are higher if you are older than 65 and disabled. You can get a high rate if you have some physical impairment.
These claims are an addition to your normal medical expenses. The South African Revenue Service or SARS prescribed these medical expenses themselves.
If you get travel allowances or have been allotted a car, you can claim the tax for the distance you have traveled for work purposes. Please make sure you have an accurate record of all the expenses that have been spent on the travel and maintenance of the vehicle. These expenses can include fuel costs, insurance, oil for maintenance, and other services.
The South African Revenue Service or SARS will go through all the information before you get all your claims. Your vehicle’s meter is examined till the last day of the tax year. The total number of kilometers is observed for both personal and business use.
For claiming the travel expenses from SARS, you need to fill out a relevant section on your tax return. You get two options i.e. travel allowance or employer-provided vehicle in that section. Keep all details safe along with the logbook as proof to show at the end of the tax year.
Wear and Tear
Many people working in South Africa might not be aware that they can claim the depreciation cost of their devices used for work. The office/work environment has changed over the past decade and people prefer using their gadgets when working. If you are using all your devices while working in the office, you can claim the deduction.
When you get hired by a company, ask them for a permission letter that allows you to use your laptop/devices. It should state that the company is not compensating you for any of the devices you are using for work purposes. While working on your tax return, write the amount under “Other Deductions.”
Before claiming the depreciation amount, make sure you have the purchase invoice as proof that you own the device. The SARS only offers depreciation of small devices that are used by employees for work. This does not include cars or other assets.
If you make donations to a registered organization i.e. Public Benefit Organization or PBO, you can claim the deductions at the end of the tax year. A total of 10% of taxable income is returned to the people who make donations every month.
If the total claim increases the threshold of 10%, you can get it added to the next year’s deduction. Please make sure that you donate the money to a registered organization that can provide you with a S18A certificate. It will serve as proof for claiming your deductions at the end of the year.
Home Office Expenses
As mentioned above, the work environment has changed over the years. People prefer both, working from home and in the office. They work from home on alternate days in a week.
As a South African national, you can claim running costs as a salaried employee of a company. If you have a space dedicated to your home office, it will have a cost. You can claim the rent, amount of depreciation of office equipment, and maintenance of the place.
The expenses of the studio can be claimed only. You cannot claim for electricity of the entire house when your office/studio is in one room only. As an employee working from home, you are only allowed to claim only 10% of the total electricity used in the house.
Hire a tax advisor because calculating the home office expenses can be quite tricky and confusing. You need to see if you qualify for the claim because SARS will assess everything you mention in your tax return. Please do not waste your time if you do not qualify for deductions.
Business Expense Deductions
If you own a business as a sole proprietor or have a company in South Africa, all your expenses can be deducted during the tax year. The South African Revenue Service or SARS makes the life of a taxpayer easy in the country. The auto-assessment during the tax year can result in a rebate in your account if your tax affairs are simple.
Business Start-Up Expenses
I’m pretty sure that 80% of the people are unaware that they can claim the expenses for the equipment they bought before starting their business. This might leave you surprised but you can claim the expenses for machinery, equipment, or any other tools that are now being used to operate as a business entity.
You can claim back expenses from SARS that have been incurred before starting your business. Provide proof that the following things are now being used for running the business. Hence you can claim back a percentage of the amount spent on business-related things.
Capital expenses are the ones spent on buying major assets or equipment that are used by the business in the long run. You can claim these capital expenses at the end of the tax year. This includes everything from machinery to hardware, renovation cost, and purchase of business vehicles.
As a business owner, you can have an estimate of the amount from a tax advisor and claim the money from SARS. Make sure you have proof of buying any assets or getting services done in your office or factory. The documents should be attached or mentioned while working on your tax return.
Day To Day Business Expenses
When working as a business owner, you will notice that several financial expenses are incurred in a day. You can claim the insurance cost, legal cost, and other utilities. The fuel of the vehicle used for traveling for work purposes can be claimed.
You won’t get your hands on the exact amount that has been spent on these things but a certain percentage can be claimed from SARS.
As a business owner, you need to keep up with new technology. If you or your staff needs training, you can get it done to operate your business. The cost can be deducted as a business expense at the end of the tax year. You can claim the money invested in the education of your employees from SARS.
Keep a record of your training sessions so that you have a valid document that can be used as proof to claim deductions at the end. You can invest in your employees without worrying about the benefits.
You should entertain your clients by providing live entertainment such as music, meals, or drinks. The expense of entertaining a client can be claimed back from SARS. You must have proof for the claim that will be assessed by SARS.
The proof should be valid that the expenses incurred for entertaining people were in the course of the business. There was no other purpose other than entertaining clients. The South Africans are unaware and do not claim these expenses.
You can claim losses from SARS as a sole proprietorship or while in partnership. If you trade in the tax year and your expenses exceed the total investment, you can claim them. These losses will be carried over to the upcoming tax year.
You or the company must be operating in the next tax year so the losses incurred during the previous year can be claimed. They will be set against the taxable income of the next year.
What items are tax deductible in South Africa?
You can claim personal deductions from SARS that include medical expenses, retirement funds, travel expenses, home office expenses, and donations to registered organizations. Provide proof that all these expenses were incurred so you can get a tax rebate before the tax year ends.
Can I claim my car as a tax deduction?
You can claim your car as a tax deduction but divide the kilometers traveled for personal and business use. The South African Revenue Service or SARS goes through your car’s meter on the first day of the tax year and re-examines it at the end. You will get the deduction for the kilometers traveled for business only.
Do people over 65 pay taxes in South Africa?
People over 65 pay tax in South Africa according to the tax threshold described by the authorities. A total of R 148 217 has to be paid if you are a permanent resident younger than 75 years of age.
How can I increase my tax return in South Africa?
You can increase your tax return in South Africa by working from home, contributing to retirement funds, or giving charity to registered organizations.
A detailed article on what I can claim back from SARS is written to get deductions before the tax year ends. As a taxpayer, you can get a rebate on many expenses that incur during that tax year. A small percentage is given back to the people who can provide valid proof of their expenses.
You might not be aware of most of the expenses that can be claimed from the South African Revenue Service. I hope my article was helpful for someone who is preparing his tax return.