These days, the only way any business really grows, is with good advertising. But this can be a rather substantial financial investment.
Luckily, you can claim some of your advertising as tax deductible expenses, as long as you incur the expenses generating income.
But claim the wrong thing and you'll be paying advertising costs and SARS penalties. Read on so you don't make that mistake.
12 Taxable fringe benefits - are you taking advantage of all of them?
There are hundreds of companies out there that don't know which fringe benefits are taxable or they land up taxing the wrong percentage on them...
This kind of error could cost you thousands in penalties to SARS if it catches you out – and it will!
TV and radio advertising – can you claim tax back
The Practical Tax Loose Leaf
says SARS considers a TV or radio advert you produced, that a broadcaster is going to play for a long time (more than 12 months), as capital in nature. This mean, you can't claim the expense of producing the advert as a business tax deduction.
But if the broadcaster plays the advert for a short amount of time(less than 12 months), it isn't capital in nature. This is the only time you can claim the production expenses a tax deduction.
You can, however, claim the cost of actually screening or airing the advert regardless of how long it airs for. So there is a small amount of financial relief when you invest in this kind of advertising.
On the other hand you can opt for advertising on permanent structures like billboards. But advertising on a structure isn't a simple tax write off either...
• Over 500 pages of definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
• 167 Case studies and practical examples that show you what elements you should consider for your taxes to be perfect;
• 83 Red flags you need to watch out for and the penalties you'll face if you don't respect them;
• Six sample templates at your disposal, ready to be filled in, customised and printed.
Advertising on a permanent structure – what are the tax implications
If you advertise on a permanent structure, such as billboard, and it brings in income for a long period of time, you can't claim it as a deduction.
The bottom line is: This is because this kind of advertising is also capital in nature.
If you have your advertising for a long period of time and it brings in income, it always becomes capital.
Ensure you don't claim advertising that's capital in nature or you'll have to pay penalties and advertising costs.