Hi Everyone,
It has been a while since I posted on this blog. I hope you are well.
I have received a query on commission and tax thereof.
The most important question relating to this is, Is your commission more than 50% of the total Income? If it is not, you will need to prove to SARS that the commission earned is for business.
You will need to keep a logbook of the business mileage to clients. Remember this is the mileage from your business address to the client.
The travel claim is not as a salaried person where the deduction is the greater of the “deemed or actual”. It is going to based on actual thus having a record of the travel expenses and logbook is essential. The travel expenses that can be claimed are as follows:
- The cost of hiring/leasing the vehicle, if you hire or lease a vehicle.
- If the vehicle is owned by you – you can claim the wear and tear. If your car was not purchased within 5 years, this cannot be claimed.
- Fuel costs
- Maintenance and repairs
- Insurance or licensing
- Interest- this is the interest on the car instalments.
Here is an example
Let’s say the car value if R250,000 and the car was bought in 2022.
Total mileage driven for the year – 10,000km
Business mileage for the year – 7,500km
The fuel costs = R5,000
Maintenance and repairs – R10,000
Interest or finance cost – R10,000
Insurance – R4,000
Wear and tear – R250,000/5 years (SARS allowable wear and tear rate) – R50,000
The business portion is 75%. X R79,000
= R59,250 – can be deducted.
If the car was bought in 2022 and let’s say you don’t pay finance costs on the car, then the deduction will be as follows:
The total actual costs = R19,000
Deduction will be 75% X R19,000 = R14,250.
If you work from home more than 50% of the time. There are some expenses that can be deducted as well.
You are allowed to claim accounting, legal, sales and marketing fees and entertainment.
If you require assistance with the above, please contact D Squared Solutions. www.dsquaredsolutions.co.za
