Tips on Expense Deductions for the Coming Tax Season
If you are unsure about whether you should submit returns for the current or next tax season, speak to our consultants. You can only claim expenses as discussed below if you submit tax returns.
Accurate recordkeeping and adequate proof of expenses are essential if you want to deduct the expenses for a particular tax season.
Home Office Expenses
Are you an employee and receive a salary, but work mostly from home? If so, you can benefit from a few savings this tax season. This is if you have a space at home, dedicated specifically for work. A study or office section in your home that you only use for the purpose is a requirement. If you have not yet created a dedicated space, do consider it, as it will enable you to claim running expenses associated with the particular space. You can deduct rent, electricity, rates, and maintenance with exclusion of cosmetic improvements.
Note that the claim must be in direct relation to the size of the space that you use for the work. You will be required to state the total square metres of the house and the total square metres dedicated to the office area. You will be able to claim a percentage in proportion to the percentage of space used regarding the above expenses. Keep accurate record of the expenses and keep proof of such. Not all home expenses are allowed and you must make sure that you qualify. We recommend speaking to our consultants about the expenses to determine if you qualify and what you can claim this or the next tax season.
The home expenses are relevant if you are a commission worker (if more than 50% of your annual income is from commission) or if you are a salaried employee and have the written permission of your employer to work from home.
Costs Related to Income Generation
If you are a sole proprietor and thus a provisional taxpayer, you are entitled to claim for costs associated with generating an income. It can be for stock, parking, toll fees, basic business lunches, etc. Of course, you cannot claim extensively for lunches and entertainment. Be sure to have proof of the expenses and ensure that any such expenses are directly related to the pursuit of income. The above is also relevant to you if you are a freelancer or even an independent contractor. It is essential to understand which expenses can be deducted. To this end, we recommend seeking advice from our consultants regarding allowable deductions for this or the next tax season.
Disclaimer: This article is for information purposes only and does not constitute legal, tax, or financial advice. Call on us for professional legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing – September 2018.