Don't just deduct any business expense. First check if you qualify!
Before you look at what expenses you can deduct from your income for the financial year, you need to know if you qualify for a deduction. If you don't qualify and claim the expense any way SARS will refund you incorrectly and you can face a criminal record for tax evasion.
Read on for the nine requirements you must meet to qualify for a deduction...
Nine requirements to qualify for a deduction
You must meet the following requirements to qualify for a deduction of expenditure and losses, in terms of the general deduction formula:
1. You must carry on a trade.
2. You must derive income, or show a probability that you will derive income in the near future, when you carry on that trade.
3. The amount you claim must constitute an expense or a loss.
4. You must incur the expense or loss during the year of assessment.
Keep reading for the final five requirements to qualify for a deduction...
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Five more requirements
5. You must incur the expense or loss in the production of the income.
6. You must lay out the expense or loss for the purposes of trade.
7. The expenditure or loss can't be of a capital nature.
8. The expenditure or loss mustn't be prohibited in terms of Section 23of the ITA (or any other Section for that matter).
9. You can only claim them as deductions once.
So now you know you qualify there are 47 allowances and deductions you can claim.
Click here to find out what they are….
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