What Expenses Are Tax Deductible In South Africa?

By Trev Gami •  Updated: 01/23/24 •  5 min read

Employees can deduct certain amounts of expenses from the income they get from their salaries or wages. Such expenses are business-related and granted by the employer to the employee. For example, travel, entertainment, and automobile expenses are tax deductible. As a general rule, all the allowances offered by the employer to their employees are taxable but should not exceed certain limits. Read on to learn the expenses that are tax deductible in South Africa

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What Expenses Are Tax Deductible in South Africa?

The Income Tax Act No. 58 of 1962 determines the expenses that can be claimed by salary earners. If you are involved in any kind of trade, you can also claim specific costs related to the generation of that income. Personal deductions include the following: 

If you operate a business as an individual or partnership, you will be entitled to a deduction of business losses or expenditures in the same way the deductions apply to large companies. 

How Much Is Tax Deductible in South Africa?

The tax-deductible is subject to a limit of R350 000 per year deducted at the rate of 27.5% of your taxable income or gross remuneration. It is a legal requirement for all individuals who earn taxable income to meet their tax obligations to avoid trouble such as penalties.  

For your medical aid contributions, you can claim R310 if you are the primary contributor, while dependents are liable to get R209. When it comes to donations, you can claim a deduction if you donate 10% of your taxable income to a charitable organization. You need to get a tax certificate if the donation is received. 

Depending on the travel allowance you get from your employer, you can claim some money from SARS. It is vital to keep a logbook detailing your trips and expenses to avoid rejection of your claim by SARS. Commission earned on top of your basic salary, you are allowed by SARS to deduct the costs incurred on this money. On the IRP5 form, the income is coded as 3606. 

Self-employed people, including freelancers, contractors, or sole proprietors, are allowed to deduct expenses involved in their work to generate income. These expenses can include telephone, stationery, and other related costs. Keep all the receipts and records of your expenses. 

What Deductions Can I Claim Without Receipts?

There are certain deductions you can claim without receipts. For instance, if you work from home, you certainly incur expenses for your office, but they usually don’t have receipts. Some of the expenses may include utilities, rent, and property taxes. However, to be able to claim deductions, your home office must be exclusively used for business and nothing else. Office furniture and other related repairs can also be deducted if you have the receipts. 

Cell phone expenses can also be deducted without a receipt. All you need to do is to calculate the costs incurred for business, which can be up to 50%. Furthermore, vehicle expenses are deductible without receipts. If you use your vehicle for business, you can deduct expenses for gas, depreciation, and gas. If you cannot keep the receipts, you can utilize mileage rates to claim a deduction. 

If you are self-employed and pay Social Security tax, you may not need a receipt to deduct taxes from your income. When you pay your tax, all the records will be available, so you may not need any receipts. The same applies to self-employed insurance contributions. Most deductions claimed by self-employed people do not require receipts. 

How Can I Reduce My Income Tax in South Africa?

You can reduce your income tax or maximize your tax refunds in South Africa by utilizing medical credits. You can claim deductions for the contributions you make to your medical aid scheme. If you have more members on your scheme, you can claim more credits or as much as R7 200. If your scheme does not cover specific medical expenses, you can claim “out-of-pocket” costs. 

If you donate to a charitable organization, you can you can claim a deduction. However, you must provide your Section 18A certificate to SARS from the organization where the donation was made. 

If you choose a tax-free investment, the income you will get will be exempted from paying tax. For instance, individuals below 65 years can enjoy a tax-free investment of up to R23 000, while those above 65 years can get up to R34 500 exemption. A lifetime investment of up to R500 000 does not attract tax. When you withdraw your money, it will not be subject to any tax. However, contributions exceeding these amounts will attract 40%, which will be added to your tax liability during that particular tax year.

If you work outside South Africa for more than 183 consecutive days, the income you get will be tax-exempt. Claiming travel expenses is another way of lowering your tax since you can claim deductions. This can be possible if you keep a logbook of your trips and ensure all the details you provide are accurate. 

If you work from home, although you are employed by a company, you will be able to claim expenses incurred, such as maintenance and others. However, you must use your office space specifically for your work-related activities, and you spend most of your time working there, or your claim might be rejected. 

Tax matters may seem challenging, but this should not be the case when you have the right knowledge. When you file your tax returns, you are entitled to claim deductions depending on your taxable income and the taxes you pay to SARS. You need to know the expenses that are tax deductible as well as the measures you can take to lower your income tax.  

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