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Didn't take out insurance cover on your stolen asset? Don't worry! Use this to cover the loss

by , 12 November 2014
Crime is a huge problem is SA. Now imagine there's a break-in in your office this weekend, but you didn't include all the stolen assets in your insurance policy. Or your office burns down, and you lose everything, but you only insured your key high-risk assets.

If this happens, we're here to tell you not to worry. You can use this to cover your company's losses...

 

Here's how to cover your company's losses using a tax deduction

 
You can claim certain losses through theft or damage as a tax deduction. Whether you qualify for this deduction all depends on the nature of the losses and the extent to which the loss is recoverable under an insurance policy. For example:
 
1. Loss of fixed assets: If you used the fixed asset in your business, you can claim a scrapping allowance. If it was for your private use only, you won't qualify for a deduction, as it's of a capital nature.
 
2. Loss of trading stock: The Income Tax Act (ITA) doesn't state whether you can claim a deduction for the loss of trading stock. But SARS does allow a deduction if the stock loss isn't recoverable under an insurance policy, or similar compensation.
 
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3. Loss of cash: If an employee or thieves steal your company's cash, you can claim the losses as a deduction as long as you can't recover the loss under an insurance policy. 
 
But if you steal from your company, you can't claim it as a deduction as held in the court ruling, Lockie Bros Ltd v CIR 1922 TPD.
 
There you have it. If you don't have insurance on your company's asset, claim the loss as a tax deduction as long as the above conditions apply. At least this way you'll recover some of the loss.
 
For more on insurance and tax, check out the Practical Tax Loose Leaf Service
 

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