We are starting to see some common trends whereby taxpayers’ expenses are disallowed because the documents submitted are falling short of SARS’s requirements.  To avoid unnecessary frustration and time wasted in raising disputes, read on to see if any of these areas apply to you.

Travel deduction

In prior years, the submission of a logbook detailing your business mileage used to be sufficient to justify your travel claim. In recent years however, SARS is requesting to see the vehicle purchase agreement to validate the vehicle price, date of purchase AND to ensure it is in the taxpayer’s name. This can be a problem if for example, the vehicle you drive is in your partner’s name. In this case, you will need to prove to SARS that even though the vehicle is not registered in your name, you are still making payments for the vehicle– this can be done by way of an affidavit and bank statements reflecting the vehicle repayments from your bank account.

Therefore, if you receive a travel allowance, or are a sole proprietor or independent contractor and claim a travel deduction, remember to submit both your logbook as well as your vehicle purchase documents.

Medical Expenses

If you have qualifying medical expenses that you paid personally and did not submit to the Medical Aid, you need to ensure that you submit the medical invoices and receipts/proof of payments. We often see taxpayers submitting a detailed schedule or listing of their unclaimed (i.e. unreimbursed) medical expenses – be warned, this will not suffice and SARS will disallow them!

Remember, this additional medical expenditure does not necessarily result in a tax credit – in fact, you have to spend quite a significant amount in order to qualify for a medical tax credit (you can check our medical credit calculator here). However, when it comes down to tax (and most things in life!) it is always worth being organised and keeping accurate records just in case you need these documents for later. 

Entertainment

SARS has always been tricky with letting this one by. Assuming you have incurred valid business related entertainment expenditure, be sure to submit a detailed schedule to SARS (date, venue, amount, purpose of meeting) as well as the invoice and receipt to support each and every amount.

Rental profit/loss

We have noticed that this is another area, which is causing a headache for some taxpayers who are submitting insufficient documents to justify their rental expenses.

If you rent out a property and earn rental income, you need to make sure you submit the following documents to SARS:

• Bond/mortgage statement reflecting interest payments for the year (if applicable). Remember, you can only claim the interest portion of your bond repayment and not the full monthly instalment.
• Rental contract in your name
• Schedule of rental expenses with supporting invoices and proof of payment for these expenses.