There is a section in the tax return called ‘Other Deductions’ which often causes confusion for taxpayers. Expenses in this section include bad debts, accounting fees, wear and tear and home office expenses. We’ve selected some frequently asked questions about these expenses to help you figure out what you can and cannot claim when completing your tax return.
1. Can I deduct both depreciation and the business use on my cellphone? How is the business use defined? My package is R1200 pm where I get 250 minutes - 75% of calls made are for business. I don't use all my minutes in a month. Can I still deduct 75% of the R1200 per month? I do not earn commission.
Yes, you can claim the depreciation on the value of your cellphone if you are required to use your cellphone for work purposes and your employer can give you a letter to support this. You will only be able to claim your cellphone expense (calls, data etc.) if you receive commission income, which is more than 50% of your earnings. These deductions are limited to business use, therefore if your business usage of your cellphone is 80% then you can deduct 80% of the expense.
2. I purchased a new laptop in November, can I claim against this expense if I use the laptop only for work?
Yes, you can claim the work portion of the depreciation on the laptop. If the value is less than R7 000, it is seen as a low value asset and the full amount can be claimed as depreciation, limited to work percentage usage. If the value is more than R7 000 please make use of our Wear and Tear Calculator. SARS may request supporting documents – if so, you will need to provide them with the invoice to prove the cost of the laptop and a letter from your employer stating that you are required to use your laptop for work purposes.
3. I am a freelancer and I need to know if I can claim the amount that I paid TaxTim to submit my return for me? My wife is an employee and she does not earn commission only a salary, can she claim her payment to TaxTim on her return too?
You are able to claim the amount that you paid for our service as a deduction on your tax return. Unfortunately, your wife will not be able to claim a deduction for the expense. SARS only allows accounting fees deduction for freelancers, sole proprietors and individuals that earn other income such as rental income.
4. I paid an accountant to assist with the accounting for my rental and freelancing income and expenses. Can I claim the accounting fee as a tax-deductible expense on my tax return?
Yes, you can claim the accountant’s fee under the rental income section and the freelance section on your return. Please ensure that you split the accounting fees on your tax return between your rental income and freelancing income.
5. I was in an accident last year and I had to stay at home for 8 months while healing. My employer allowed me to work from home during this time. I had an office setup and I worked full 8-hour days for this period. Can I claim for the expenses I incurred such as internet, electricity, telephone etc.?
Yes, you can claim these expenses for this time period. You can also claim for your water and lights, interest on your bond (if you own the house) or the rental expense if you were letting the property. Please take note that you will be required to provide SARS a letter from your employer that stated that you were allowed to work from home. Read here, for more on home office expenses.
6. My mother has an office setup at home for us. Can I claim for home office expenses even if I am not required to work from home?
No, you will not be able to claim these expenses. This deduction will only be allowed if you are allowed to work from home more than 50% of the time. The office should be setup specifically for working from home and no other purpose and you will only be allowed the deduction if you incurred the expense with regards to the home office. Read here, for more details on home office expenses.
7. I have a rental property, which I had tenants in until the end of August last year. They paid me for the first 2 months of the tax year but then both husband and wife lost their jobs and were unable to pay me. They offered to pay me when they got back onto their feet, but instead they abruptly moved out of the house when they got back onto their feet. I am now unable to recover the debt from them. Can I somehow claim this on my return?
You will be able to claim it as a bad debt if you declared the rental income on your income tax return.
8. I have a personal loan, which I am unable to pay - can I claim this as a bad debts expense on my tax return, so that I can use the tax refund to pay towards the loan?
No, the non-repayment of your personal loan will have no impact on your personal tax return.
You can only claim a bad debts expense for tax purposes if you were due to receive income but never did e.g. commission or a bonus. In this case, the amount that was due to be paid, but was never received by the taxpayer, must reflect on the taxpayer's IRP5 or be included in turnover/sales (in the case of sole proprietors).
Read our blog, for more details on other expenses, which can be claimed in the ‘Other Deductions’ section of your tax return.