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What costs can be subtracted from the income of our small business?

Posted 23 June 2015 under Tax Questions



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Pieter says:
14 June 2015 at 12:41

I am a member of a CC and a partner in a partnership. We are the two same people in both the partnership and the CC. From our activities in the CC, we came upon another way to make money and after a period of testing, we decided to split the other way off our CC activities, so the Partnership became a new business. In order to make this new income stream work, we need to travel and test tourism opportunities in SA as well as some of our neighboring countries to be able to build an internet community to which we will market tours and accommodation. Can the expenses caused by this travel, like fuel and accommodation, telephone, internet costs, vehicle costs etc. Be subtracted from income to determine profit?

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TaxTimTaxTim says:
15 June 2015 at 7:03

Yes all business related expenditure can be included as a deduction against any profits made. Remember that this will only relate to business and not any personal expenditure.


Pieter says:
15 June 2015 at 9:04

Tim, what I want to know is what will they take as personal? Since the goal of the business is to build expertise to be able to serve travellers to Southern Africa, we have to travel and we have to stay over. To make it as cheap as possible, we mostly camp. My concern is that they will not take our camping fees as a business cost. Sometimes we also have to eat at restaurants, since when we travel from one place to the other, we must eat as well, but cannot stop and make a fire next to the road to prepare food. Can we also subtract that restaurant meals? Sometimes we meet tourists in the camps that we visit, we invite them over for a meal and a drink. These people are already converts to SA's tourism places, but they recommend us to friends all over the world, so can we take that as a legitimate cost for marketing of our business? PS. I think your idea of Tax Tim is very good. I hope you make lots of money with it. Maybe if you have a "Tax College" section on your site especially aimed at those who want to start a new small business, where they can go to study some of the most important principles of the tax world they can expect.


TaxTimTaxTim says:
16 June 2015 at 18:53

Thanks very much for the positive words! We will be launching small business offerings in the next few months, but you can sign up for our SME Newsletter in the meantime!

All the activities and costs you speak of would be accepted by SARS provided they can be demonstrated as business related expenses which means that if you did not incur them then it would hamper you ability to earn income. What this means is that if you are travelling for work purposes or to increase your understanding of areas so you can sell these areas for work purposes then this would be considered a deduction. Similar to advertising or marketing. However if you are eating as you would normally and this does not include customers then that would not be allowed as a deduction because it does not contribute to earning income unless the restaurant itself is somewhere which builds your knowledge which then contributes to earning income. Eating food to survive is a personal expense and SARS may not look favorably on these expenses. You would need to use judgement here.


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