Company allowances and deductions can be hard. Trying to figure what is and what isn't tax deductible is enough to give any manager grey hairs.
But the team behind the Practical Tax Loose Leaf has some smart ways to maximise your deductions.
Here they are
Use these four tips to deduct even more tax – 100% legally
Tip #1: Deduct expenses you haven't paid for yet
You don't have to pay for an expense for it to be allowed as a deduction. Expenditure actually incurred doesn't mean expenditure actually paid during the year of assessment. It means all expenditure for which a liability has been incurred during the year, whether the liability has been paid for during that year or not.
The same applies in accounting. You need to recognise the expenditure as soon as you have or expect an outflow of cash, or a liability is created.
Tip #2: Claim expenses even if your business fails
It's not necessary for your business to actually generate income. It's only necessary that the expense be incurred for the purpose of producing that income.
The mere fact that a business fails to make a profit has nothing whatsoever to do with whether the expenses were incurred in an effort to produce income.
Tip #3: Investigating fraud is deductible
The costs of the investigation and legal advice related to embezzlement and fraud are generally allowable as tax-deductible.
Tip #4: Claim finance charges
This expense is often overlooked by the average taxpayer, don't make this mistake. Claim the finance charges (interest) where your car was purchased on a hire purchase contract. Just remember that you can only claim the interest attributable to that particular tax year.
Therefore, if your rental contract is over 60 months, the deduction will be 12/60 of the interest chargeable. Alternatively, request your financier to confirm the exact amount paid for that year. Take into account any reduction or increase in the interest payable.
There you have it. In these trying economic times, finding ways to keep your taxes low isn't as hard as you thought. You just need to be smart when it comes to what SARS will and won't allow when it comes to allowances and deductions.