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Five things every business owner must know about interest deductions

by , 09 June 2014
Our tax experts say one of the biggest challenges companies face is not knowing which expenses they can deduct from their income for the financial year.

As a result, they deduct the wrong expenses and end up with SARS penalties and interest.

If you're in the same boat, especially when it comes to interest deductions, our experts have you covered.

Today, they reveal five crucial things every business owner must know about interest deductions. This includes the basic rules of deducting expenses and instances when you can't claim interest as a deduction.

In fact, when you're done with this article, we believe you'll have the confidence to make interest deductions without worrying about being on SARS' radar.

The five must knows when it comes to interest deductions

#1: SARS won't let you claim these three types of interest as a deduction.

#2: If you take out a loan for one of the following reasons, you can't claim the interest as a tax deduction.

#3: The reason you borrow money matters when it comes to qualifying for interest deductions.

#4: If you stop trading or abandon your business, these are the consequences when it comes to interest deductions…

#5: Even though interest generally qualifies as a deduction, the courts say there are certain principles you must use to determine its deductibility. So the only way to ensure you don't get lost in the interest deductions maze is to always remember this golden rule…

Remember, SARS takes interest deductions very seriously. It only takes one mistake for it to deny your deduction and levy penalties.

But, our experts hope these five important points will help you avoid mistakes when it comes to interest deductions.

Interest isn't the only type of deduction you can take advantage of. In fact, there are 46 more you can benefit from. If you want to find out more about these deductions, check out Allowances and Deductions: 47 ways to get your money back from SARS!

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