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Before you claim a tax deduction on your company's tax return, consider these four points

by , 15 October 2014
When you complete your company's tax return, you also need to claim your tax deductions. These are useful when it comes to getting money back from SARS or reducing your outstanding tax debt.

But you can't just claim any old deductions or do it without much thought. You have to be careful about claiming deductions because if you get it wrong, it could trigger SARS penalties and interest.

To avoid this, consider these four things before you put down a deduction on your corporate tax return...

 

Don't put that deduction on your tax return until you consider these four points

 
#1: Do you actually qualify for the deduction?
 
SARS has limitations around certain tax deductions that allow only certain people to claim them. If you claim when you don't qualify to do so, it could land you in serious trouble.
 
#2: Have you correctly worked out the deduction?
 
You must double check whether or not you worked out the deduction correctly. If you work it out incorrectly and over claim, SARS will penalise you. Rather check every deduction a few times to ensure it's correct.
 
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Don't become SARS' victim by not completing your IT14SD target="_blank" class="contextual_links">IT14SD correctly
 
 
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#3: Do you have valid supporting documents to substantiate your tax deduction?
 
SARS might reject your deduction claim if you don't have valid supporting documents. If it approves the claim but audits you later on and sees you don't have the right supporting documents, it will penalise you.
 
#4: Have you claimed similar deductions in the past?
 
If you have a record of claiming similar deductions you must be even more careful about substantiating them. Otherwise, SARS make be suspicious and look for even the tiniest mistake in your tax history. 
 
If it finds one, you can expect to pay SARS penalties.
 
Always check these four points before you claim a tax deduction on your company's tax return to avoid SARS penalties.
 
PS. To find out everything you need to know about the different business tax deductions, check out 47 Allowances and Deductions
 

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