How to save even more tax!

We had such a good response to our article a week back regarding some tax tips, below we have some more for you.

  1. Keep a logbook if you drive a company car

The use of an employer-provided car is a taxable fringe benefit, which means it will be included in your taxable income and you will be taxed on it. If however, you keep a logbook to record your business mileage, you can claim a travel deduction which could reduce your tax owed to SARS. Please note you can only claim a travel deduction if your company car fringe benefit appears next to source code 3802 or 3816 on your IRP5.

  1. Claim commission related expenses if you are a commission earner

If you are a commission earner, you will have commission income coded to source code 3606 on your IRP5. If your commission income (i.e. income next to source code 3606) makes up more than 50% of your total remuneration (i.e. income next to source code 3699) then SARS will allow you to deduct all your commission related expenses against your commission income. These are all expenses you incurred in order to earn your commission. Examples of such expenditure are telephone, stationery, employees’ costs, etc. We suggest you keep a record of these expenses, together with the related invoices, so that you can take advantage of this deduction in order to pay less tax.

 

  1. Claim business travel if you are a commission earner

If you are a commission earner, you will have commission income coded to source code 3606 on your IRP5. If your commission income (i.e. income next to source code 3606) makes up more than 50% of your total remuneration (i.e. income next to source code 3699) then SARS will allow you to deduct all your business-related travel against your commission income. SARS will only allow you to claim this travel deduction if you keep a logbook to record all of your business travel.

  1. Claim your daily costs if you receive a subsistence allowance

If you travel for work and your employer pays you a taxable subsistence allowance which is coded to source code 3704 for local travel and / or 3715 for foreign trips on your IRP5, you’re able to claim against the allowance for your expenses – provided you have receipts for them.

You can claim either your actual daily costs (meals and incidentals) or the SARS approved deemed daily rate. Incidental costs include beverages, private phone calls, tips and room service.

What is the SARS deemed daily rate?

SARS has a set deemed rate for meals and incidental costs for local travel, applicable per night the employee spends away from home. They also have a fixed daily amount for business travel outside of South Africa, which varies from country to country.  Visit the SARS website to get the current set rates, as these change yearly.

  1. Claim expenses if you earn non-salary income 

If you are self-employed (i.e an independent contractor, freelancer or sole proprietor) SARS will allow you to deduct all your business-related expenses against your business income. These are all expenses you incurred in order to earn your income. Examples of such expenditure are telephone, stationery, employees’ costs, etc. We suggest you keep a record of these expenses, together with the related invoices, so that you can take advantage of this deduction in order to pay less tax.

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