After submission of your tax return, when you receive your tax assessment (ITA34) from SARS, you need to scan down to the block “Compliance Information” to see if SARS requires anything further from you. You will see “Selected for audit or verification” with a Y or N (Yes or No) next to it. If you have a N, you can breathe a sigh of relief and consider yourself fortunate that SARS probably doesn’t require anything further from you for this tax year. If you have a Y in the block (and we are seeing this more and more frequently) it means that SARS wants to see evidence or back up which supports the amounts you entered on your tax return.
We see a wide variety of document submissions, which are often, rejected by SARS much to the dismay of disgruntled taxpayers. If anything is unclear or does not tally back to your tax return, SARS may well disallow the tax deduction altogether and issue you a revised assessment with a whole lot more tax for you to pay. It will then be up to you to dispute the assessment and submit documents again, which will delay the finalisation of your tax return and can take many months to resolve. It is therefore very important to be as thorough as possible when submitting supporting documents to SARS.
To clear up any confusion, we have compiled the table below, which lists the most common expenses, and the exact documents that SARS requires based on the type of taxpayer you may be.
| Expense | Sole Prop/freelancer/independent contractor | Commission earner (commission income makes up more than 50% of your remuneration) |
Salaried employee |
| Depreciation on business assets (e.g. laptop) |
|
Letter from employer stating you can use personal laptop for work Proof of purchase (invoice) Calculation showing how wear and tear was calculated and apportioned between business and personal use |
Letter from employer stating you can use personal laptop for work Proof of purchase (invoice) Calculation showing how wear and tear was calculated and apportioned between business and personal use |
| Travel | Logbook with details of business mileage Vehicle purchase invoice (if applicable) Fuel, maintenance, license, insurance Invoices |
Logbook with details of business mileage Vehicle purchase invoice (if applicable) Fuel, maintenance, license, insurance Invoices |
*Logbook with details of business mileage Vehicle purchase invoice (if applicable) Fuel, maintenance, license, insurance Invoices (if actual costs are used) |
| Uber Costs | Uber receipt (email) | Uber receipt (email) | Cannot Claim |
| Medical Costs | Medical Aid Tax Certificate Invoices from doctor/pharmacy, as well as receipts (POPs) for qualifying expenditure not submitted to the Medical Aid |
Medical Aid Tax Certificate Invoices from doctor/pharmacy, as well as receipts (POPs) for qualifying expenditure not submitted to the Medical Aid |
Medical Aid Tax Certificate Invoices from doctor/pharmacy, as well as receipts (POPs) for qualifying expenditure not submitted to the Medical Aid |
| Bank Charges | Bank Statement reflecting bank charges for your business account | Bank Statement reflecting bank charges for your business account | Cannot Claim |
| Entertainment | Schedule of entertainment expenses, showing details for each claim eg. names of people, purpose of meeting, etc Restaurant invioices/receipts |
Schedule of entertainment expenses, showing details for each claim eg. names of people, purpose of meeting, etc Restaurant invioices/receipts |
Cannot Claim |
| Telephone | Sample of actual monthy invoices Calculation showing how the total expense was apportioned between business and personal use |
Sample of actual monthy invoices Calculation showing how the total expense was apportioned between business and personal use |
Cannot Claim |
| Home Office | Calculation showing how apportionment was calculated Actual invoices to support claim e.g electricity and water, rates, bond mortgage statement, rental invoice,etc |
Letter from employer stating taxpayer can work from home and % time spent there **Calculation showing how apportionment was calculated **Actual invoices to support claim e.g electricity and water, rates, rental invoice,etc |
Letter from employer stating taxpayer can work from home and % time spent there **Calculation showing how apportionment was calculated **Actual invoices to support claim e.g electricity and water, rates, rental invoice,etc |
*Salaried employee can only claim travel expenditure if a travel allowance (source code 3701 or 3702), or use of company car (3802 or 3816) fringe benefit, is received.
** Commission earners and salaried employees need to meet certain criteria in order to deduct home office expenses Click here.
Please take note of the following guidelines:
• SARS will NOT accept schedules or lists of expenses alone
• You must submit scanned copies of the actual invoices/receipts
• Always make sure that you reconcile your supporting documents back to the total expense you claimed on your tax return.
• Submit all calculations and make sure they are clear and easy for SARS to review. You can use our handy Wear and Tear Calculator and Home Office Calculator
