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SARS can get it wrong too, here's one situation where it did

by , 01 July 2014
SARS, as an organisation, employs people such as auditors, agents and financial experts. This means, as with any other organisation, it's vulnerable to human error.

As a result, SARS can actually get it wrong sometimes. That's why it's important for you to understand the law, such as Section 23(m) of the Income Tax Act.

With this information, you can back up your claim in situations like this one where SARS got it wrong...

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Here's a situation where SARS misquoted Section 23(m) on wear and tear allowances

The experts behind Practical Tax Loose Leaf Service receive a lot of interesting tax questions. 
One business owner told our experts he applied for a depreciation allowance on his cell phone and the response he got back from SARS disallowed the claim. This was the reason:
'Depreciation for cellphone amounting to R840.00 claimed against employment income doesn't qualify as a deduction in terms of Section 23(m) of the Income Tax Act'
The auditor who handled this claim then misquoted Section 23(m). He only quoted the part of Section 23(m) that states you can't claim any deductions if you earn your income through commission. However, this auditor got it wrong because he left out the next part…

Here's what Section 23(m) really says about wear and tear allowances

This SARS auditor forgot to consult the next part of Section 23(m). Here it says this business owner can claim any allowances and expenses outlined in Section 11 (c), (e), (i) and (j). 
In this Section, it says you can make a deduction if it: 
- Isn't capital in nature; or
- Comes from bad debt.
So keep up-to-date with the tax laws in the Income Tax Act to ensure SARS' rulings are fair and legal. 
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