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Claim entertainment expenses incorrectly and a fine from SARS will be the least of your worries. Here's what else you'll be in for

by , 16 January 2015
Dear reader,

There are only certain entertainment expenses you can claim input tax on.

And if you claim incorrectly or claim when you shouldn't have, not only will SARS reverse your deduction and slap you with penalties, interest and anything else it can justify, it gets worse...

It may flag you for more regular audits.

Can you face SARS going through your company books with a fine tooth comb for the next five years?

I wouldn't want that for you. So I'm giving you Dee Bezuidenhout's checklist (contributing author of the Practical Vat Accountancy Loose Leaf). It has 17 entertainment expenses you can claim input tax on so you can avoid this fate...

Claim input tax on these 17 entertainment items
Business travel and employee subsistence

  1. Business travel if you have to spend more than one night away from home on business travel
  2. Your employees personal subsistence (Section 17(2)(a)(ii) of the Vat Act). This includes meals, refreshment (including liquor) and accommodation. So, if your employee eats somewhere other than his hotel when he's away on business, you can still claim the Vat on his meal.
  3. Domestic airfares.
  4. Parking.
  5. Stationery.
  6. Internet costs (where applicable).
  7. Toll gate fees. 

Moving and relocating costs

  1. If your employee transfers, or has to relocate to your area, and they live in a guesthouse or hotel while they find their own place. Costs for the employee's family are also claimable.
  2. Removal or moving costs. 
  3. Royalties you pay.

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Your chances of being audited by SARS just increased…
A small administrative mistake is all it takes for SARS to schedule an audit for your business.

Putting a simple zero in the wrong place on the new VAT return could cause a long and tedious audit process that could cost your business thousands.
Make sure this never happens to you by filling in the new VAT return 100% correctly every, single time. 

Medical expenses and flowers
  1. Employees medical expenses if you pay the bill.
  2. Flowers to staff who are sick, having babies, having operations or whose loved ones have passed away.
  3. Flowers for reception and plants for the office.

Training seminars

  1. Seminars or training courses attended.
  2. Speakers doing presentations to customers on topics for your business.

Promotional Gifts

  1. Promotional gifts such as:
  • Pens;
  • Desk pads;
  • Calendars;
  • T-shirts etc.

Subscriptions and memberships

  1. Subscriptions to professional bodies by your enterprise, for example the Chamber of Commerce. 

For everything you need to know about Vat and claiming input tax, check out the Practical Vat Loose Leaf here...

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