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If you want to decrease your tax burden, avoid these four deduction mistakes and the penalties that'll follow

by , 23 June 2014
Allowances and deductions are a great way to lower your tax burden. Unfortunately though, lots of people aim for deductions and get penalties instead because of basic errors.

These penalties can range between 10% and 200% depending on how bad the error is. So instead of paying less tax, you end up tripling the amount you owe SARS.

Rather play it safe and ensure your claim tax deductions and tax allowances right by avoiding these four deduction mistakes.

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Common deductions and their mistakes

You can take advantages of common tax deductable items. For example, company car allowances, property repairs, damages or advertising expenses.
These are all common business deductions. You probably have a company car or had repairs done to your building lately. This means you can claim these as deductions... As long as you avoid these errors...

Avoid these deductions errors so SARS won't deduct your money

1.Company car: The big error here is you can confuse a company car deduction with a travel allowance.
These two are very different. If you confuse them on your tax return, SARS may hit you with a penalty.
If you're not sure about the difference, check out Your Guide to taxing Company Cars and Travel Allowances. It'll clearly explain the difference for you.
2.Property repairs: Be careful you don't confuse 'repairs', 'modifications' and 'improvements'. You can't claim a deduction on any modifications or improvements to your building.
3.Damages: You can claim a deduction on fire, theft or damage to your business property as long as make sure that 'property' isn't a capital asset. So while you can claim if someone steals all your stock, you can't if they steal your equipment (a capital asset) though.
4.Advertising expenses: You can claim the cost of your advertising as long as you don't use it for more than 12 months or it's not a fixed structure like a billboard.
If you can claim these deductions without making these common errors, you'll be well on your way, to reducing your tax burden.
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There's nothing better than getting money back from SARS...
But do you know whether you can claim for:
The cost of new laptops for your business?
5% of building costs?
Stolen assets?
Gifts you give your clients to say thank you for their business?
Lucky for you, neither did 7 743 other people on our Tax Club Site...

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