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TOPIC: Registering for tax, calculating taxable income - what is tax deductible?

Registering for tax, calculating taxable income - what is tax deductible? 6 years 9 months ago #665

  • Jack
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Hi All

My original post was here, www.mysmallbusiness.co.za/forum/tax/613-...ue-tax-penalties#642

I thought it would be best to start a new one though.

I need to register for tax, I have been working on a freelance basis and everything needs to be formalised, I need to register for tax and register a CC.

I have downloaded the IT77 document.

I don't really know what to fill in under the income details section. Salary, commision etc. I have been advised to calculate my taxable income.

I am looking at the last year's bank statements.

I have been working from home. What can I deduct when calculating my taxable income?

- Can I deduct a portion of my rent here?
- Can I deduct petrol? I mostly drive for business purposes.
- I use one room as an office. Can I make deductions for office equipment?
- What about deposit on the premises?
- Vehicle insurance?
- Bank Charges?
- Computers / Laptops
- Business Software
- Entertainment? I have often met with clients over lunch etc...
Last Edit: 6 years 9 months ago by Jack.
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Re: Registering for tax, calculating taxable income - what is tax deductible? 6 years 9 months ago #687

Best way long term is get a CC registered.

Provding your business is conducted from your home office and you have something sort of formal set up you can claim pro-rata expenses according to the size of the office space. This pro-rata rate includes expenses like rent, levies, electricity etc..
Your fuel costs are claimable, but best to keep a log book of your business travel and pro-rata the cost according to business/private km. This will apply to all expenses on your motor vehicle.
For other expenses the general rule of use applies, if you use it for mostly for business claim it otherwise pro-rata it. When it comes to equipment like computers the full expense it not claimable, you will have to work the annual depreciation out on that particular type of equipment and claim only the depreciation amount.
Entertainment is something that should not be abused, if it is valid business expenditure keep the slip and write on the back who it was you entertained so if anyone from SARS does an Audit they can easily cross reference the client.
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Re: Registering for tax, calculating taxable income - what is tax deductible? 6 years 9 months ago #689

  • Jack
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Xumilsa1 wrote:
This will apply to all expenses on your motor vehicle.

Thanks. I bought a vehicle and paid cash. Would some / all of this be deductible.
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Re: Registering for tax, calculating taxable income - what is tax deductible? 6 years 9 months ago #697

You can deduct business related expenses.

So your equipment, entertainement etc.

If SARS do however query this you will just have to provide them with slips and explain that this was all business related.
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Re: Registering for tax, calculating taxable income - what is tax deductible? 6 years 9 months ago #699

Your vehicle is not tax deductible, you can however get some tax relief if you use it for your business but then you must keep a detailed log book of all your km traveled for business and private use. Keep track of all your expenses paid for petrol, services ect. What I normally suggest is to get you a petrol card at one of your leading banks, like a credit card and to use it only for that vehicle, then you have a good record of all your expenses paid. You can even claim depreciation as a tax relief on your vechile.
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Re: Registering for tax, calculating taxable income - what is tax deductible? 6 years 3 months ago #1093

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Please explain more about claiming depreciation on a private vehicle that is used for both business and private use? We are actualy using two vehicles for business and private and will be keeping a logbook to differentiate between private and business. Should I just be keeping all the records of petrol expense and then apply it as an expense in the percentage derived from the business/personal usage on a monthly basis? What happens in the case of the private vehicle that was purchased on HP? Can I claim a relative proprotion of that amount? and what about the vehicle that is purchased cash? how can I claim for that? Also the logbook will show a different percentage of petrol usage each month so how to I calculate the cost of servicing and other vehicle related expenses?
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