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Individual Taxpayers! Expenses you are allowed to deduct. (Part 2)

In the previous article we discussed the first set of allowable deductions on your expenses_you_are_allowed_to_deduct_from_SARSpersonal income tax return,

  • Pension Fund contributions
  • Retirement Annuity contributions
  • Income Replacement Policy contributions
  • Donations

This week we will have a look at the remainder of expenses you are allowed to deduct when submitting your personal tax return to SARS.

Travel Expenses

Travel Allowance

A travel allowance is granted to an employee in respect of travelling expenses for business purposes.

As of 1 March 2010, all employees who receive a travel allowance must keep accurate records of actual distances travelled by means of a logbook, which SARS requires to support the claim for business kilometers on assessment of your personal tax return.

SARS defines a valid logbook as a log that contains as a minimum the following items:

  • Date of travel
  • Destination of travel
  • Reason for travel
  • Opening kilometers
  • Closing kilometers
  • Split between business – & private kilometers travelled

An important note to remember:

The distance one travels to and from your residence and your office are deemed to be private in nature.

Medical and disability expenses

1. Persons with a disability

Where a taxpayer, or his/her spouse, or a child is a person with a disability, all medical expenses may be included as a deduction.

2. Persons under 65 years of age

     Medical scheme contributions

  • Monthly tax credit of R216 for taxpayer and first dependent
  • Additional tax credit of R144 for each additional dependent

     Out-of-pocket medical expenses

  • Medical scheme contributions in excess of 4 times the
  • tax credit PLUS any other out-of-pocket medical
  • expenses above 7.5% of taxable income

3. Persons 65 years and older

These taxpayers may deduct all medical expenses

Home office expenses

Any cost incurred in respect of a section of a private residence may be deducted against your taxable income, Provided that this section of your residence is regularly and exclusively used for business purposes. This section must also be specifically fitted for conducting this trade.

Read Also:  Small Business Corporations in South Africa: Benefits, Qualification, and Compliance

As an example, a normal salaried individual will not be allowed to deduct any home office expenses, unless the bulk of his/her income is derived from commission and his place of work is at a location other than an office provided by his/her employer. Sole proprietors will be allowed to deduct this expense as long as they adhere to the provisions mentioned in paragraph 1.

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