A PR agency or marketing agency retainer
Deductible
Agency fees and retainers for marketing and PR work are fully deductible.
You can claim this · Sole proprietor or freelancer
Monthly retainers, project fees and the media spend the agency buys on your behalf are all deductible where they relate to your trade. Make sure the invoice separates the agency's fee from pass through media spend, because the VAT treatment can differ, especially on foreign platform spend.
Where people go wrong
Paying a retainer in advance for a period that runs past your year end and deducting all of it now. Prepaid service fees can be limited. Also, if a freelance marketer works only for you, under your direction and hours, there is an employees tax question rather than a simple invoice.
Does buying it save you tax?
Deductible at your marginal rate. Judge an agency on the pipeline it produces, not on the deduction.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A bottle of whisky for a customer
Deductible
A bottle given to a customer is deductible for income tax, and the VAT on it is definitely denied.
You can claim this · Sole proprietor or freelancer
Alcohol is squarely inside the VAT definition of entertainment, so there is no input tax on it at all. For income tax the ordinary test applies and a genuine customer gift is deductible.
Where people go wrong
Running the business's liquor purchases through the accounts and calling it client gifts. Keep the record of which bottle went to which customer and when. Bottles that ended up in your own cupboard are private, and if a whole case appears on one slip expect the question.
Does buying it save you tax?
Deductible, so you save your marginal rate. It is not a way to buy your own drinks cheaply, and treating it that way is the fastest route to a disallowed claim.
Authority s11(a)
excluded by Entertainment input tax is denied
governed by Client entertainment is deductible for income tax but blocked for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A bribe or a facilitation payment to win work
Not deductible
A bribe is never deductible, and paying one is a criminal offence, not a marketing expense.
There is no relief for this · Anyone
The Income Tax Act specifically prohibits a deduction for expenditure that constitutes a corrupt activity or that is incurred in respect of a fine or a corrupt activity. South Africa has no exception for so called facilitation payments, unlike some other countries, so there is no small payment carve out to rely on.
Where people go wrong
Disguising it as consulting fees, a commission, a finder's fee or a donation. The disguise does not cure the disallowance, it adds an understatement penalty and a possible criminal charge to it. Tax practitioners and accountants also carry reporting duties when they see this.
Does buying it save you tax?
No. It is not deductible, it is unlawful under the Prevention and Combating of Corrupt Activities Act, and the tax consequence is the least of the problems it creates.
Authority s23(o)
excluded by Fines, penalties and unlawful payments are not deductible
may unlock Understatement penalty percentages
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A competition, prize or giveaway to attract customers
Deductible
The cost of a prize you give away to promote the business is deductible advertising.
You can claim this · Sole proprietor or freelancer
Whether the prize is your own stock or something you bought in, the cost is deductible where the promotion is aimed at producing income. If the prize is food, drink or hospitality, the VAT entertainment denial can apply to the input tax on it.
Where people go wrong
Running a promotional competition without checking the Consumer Protection Act rules, which is a legal exposure rather than a tax one, and awarding the prize to a family member. A prize that lands with your own household is private expenditure however the draw was described.
Does buying it save you tax?
Deductible, so you recover your marginal rate on the prize. Giveaways build reach, they do not build tax savings.
Authority s11(a)
excluded by Entertainment input tax is denied
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A discount, rebate or settlement discount given to a customer
Deductible
A discount you give is normally netted off your income rather than claimed as an expense, and either way it reduces what you are taxed on.
You can claim this · Sole proprietor or freelancer
If the discount is given at the time of the sale, you simply record the lower amount as income. If it is given later, you usually issue a credit note and reduce the income already recorded. For VAT, a credit note adjusts the output tax on the original invoice.
Where people go wrong
Declaring the full invoice value as income and then also claiming the discount as an expense, which double counts it. The other trap is giving a discount, never issuing a credit note, and then paying output VAT on money you never received.
Does buying it save you tax?
This is not a tax play at all. You are giving away real margin to get paid or to keep the customer, and tax only reduces the sting by your marginal rate.
governed by General deduction for expenditure in producing income
may unlock Bad debt relief for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A gift to a client
Deductible
A business gift to a client is deductible for income tax, but the VAT treatment depends on what the gift is.
You can claim this · Sole proprietor or freelancer
The income tax deduction follows the normal test of expenditure in the production of income. For VAT, gifts of food, drink and hospitality are entertainment and the input tax is denied. Branded goods of small value handed out generally sit outside that denial, but the classification is the whole question so check it before claiming.
Where people go wrong
Gifts that are really personal. A present for a friend who happens to also be a customer, or for a family member in the trade, is private expenditure. Also, a lavish gift to someone who makes purchasing decisions can cross into an unlawful inducement, and unlawful payments are never deductible.
Does buying it save you tax?
You get your marginal rate back. Give the gift because the relationship deserves it.
Authority s11(a)
excluded by Fines, penalties and unlawful payments are not deductible
excluded by Entertainment input tax is denied
governed by Client entertainment is deductible for income tax but blocked for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A photographer for product and website shots
Deductible
Paying a photographer for product or website images is a deductible marketing cost.
You can claim this · Sole proprietor or freelancer
The shoot fee, studio hire and the licence to use the images are deductible when incurred for the trade. If you buy outright ownership of a large image library that you will use for years, there is a capital argument, but an ordinary product shoot is expensed.
Where people go wrong
A shoot that mixes business product photos with family portraits on the same invoice. Ask the photographer to invoice them separately, because a single mixed invoice invites the whole claim to be questioned. Also check who owns the copyright, since a licence for a limited period is a cost, not an asset.
Does buying it save you tax?
Deductible at your marginal rate. Good photography sells product, which is the actual reason to pay for it.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
A video shoot or advert production
Deductible
Producing a promotional video or advert is generally deductible in the year you incur it, even though you keep using the video afterwards.
You can claim this · Sole proprietor or freelancer
Advertising costs are usually deductible when incurred, and the fact that a campaign keeps working for a while does not by itself make it capital. A very large production that creates a lasting asset you licence out or amortise over years is a different conversation and should be checked.
Where people go wrong
Prepaying a production house across a year end and deducting it all up front. Prepaid expenditure can be pushed into the year the service is actually rendered. The other trap is claiming travel, accommodation and catering on a shoot that doubled as a trip away.
Does buying it save you tax?
Deductible, so it costs you the fee less your marginal rate. Video is expensive, and it is worth it only where you will actually put media spend behind it.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Billboard rental on a main road
Deductible
Renting billboard space to advertise the business is deductible in the year the rental is incurred.
You can claim this · Sole proprietor or freelancer
The monthly or campaign rental is a running advertising cost. The artwork and printing of the billboard skin is usually treated the same way because it has a short life. If you build a permanent structure that you own, that part is capital and follows a different route.
Where people go wrong
Prepaying a twelve month billboard contract and deducting the whole amount in a year where most of the exposure falls in the next year. Prepaid expenditure rules can push part of it forward, so check before you claim the lot.
Does buying it save you tax?
Deductible, but a billboard is one of the hardest spends to measure. Buy it because you can trace enquiries to it, not for the tax.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Branded clothing and promotional merchandise
Deductible
Clothing and merchandise carrying your logo, whether worn by staff or given away, is deductible.
You can claim this · Sole proprietor or freelancer
Branded stock handed to customers is advertising. Branded clothing issued to staff is a staff cost. The rules differ once you look at the employee side: a special uniform that the employee is required to wear can be free of a fringe benefit charge, while ordinary clothing given to staff is generally a taxable benefit.
Where people go wrong
Putting a small logo on clothing you would wear anyway and treating the whole wardrobe as advertising. SARS looks at whether the item is a distinctive uniform or just clothes. If it is just clothes, it is private and you also create a fringe benefit problem for whoever wears it.
Does buying it save you tax?
Deductible, so it costs you the price less your marginal rate. Branded merchandise is worth it when people actually use it in public, not because it is a write off.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Business cards
Deductible
Business cards are a small, fully deductible marketing cost.
You can claim this · Sole proprietor or freelancer
Design and printing are both deductible when incurred for the trade. Keep the printer's invoice, that is the whole record you need.
Where people go wrong
There is no real trap here. The only thing that ever goes wrong is claiming cards printed for a job you do as an employee, where the salaried deduction bar applies.
Does buying it save you tax?
Deductible, but the amount is so small that the tax saving is negligible. Print them because you need them.
Authority s11(a)
excluded by Salaried employees cannot deduct ordinary work costs
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Christmas hampers for customers
Deductible
Christmas hampers for customers are deductible for income tax, and the VAT on the food and drink in them is denied.
You can claim this · Sole proprietor or freelancer
A hamper is entertainment for VAT purposes because it is food and drink, so a VAT vendor deducts the VAT inclusive cost for income tax and claims no input tax. Keep the list of who received hampers, it is the evidence that the spend was aimed at customers.
Where people go wrong
Buying hampers for family and staff on the same invoice as the client hampers and claiming the whole invoice as marketing. Hampers to staff are a staff cost with a possible fringe benefit angle, hampers to family are private, and only the client portion is marketing.
Does buying it save you tax?
Deductible at your marginal rate. December hampers are goodwill, and goodwill is a fine reason. The tax saving is not.
Authority s11(a)
excluded by Entertainment input tax is denied
governed by Client entertainment is deductible for income tax but blocked for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Exhibiting at a trade show or expo
Deductible
Stand space, stand build and the show costs of exhibiting are deductible marketing.
You can claim this · Sole proprietor or freelancer
Floor space, stand hire, printing, and the travel and accommodation to attend are deductible where the purpose is to win business. If you buy a modular stand system that you reuse at show after show, that structure is an asset and comes off over time instead.
Where people go wrong
Bolting a family holiday onto an out of town expo and claiming the whole trip. The business portion of travel and accommodation is deductible, the days you spent at the beach and the family's tickets are not. Split it honestly before you claim.
Does buying it save you tax?
Deductible at your marginal rate. Trade shows are expensive, so judge them on leads closed, not on the deduction.
Authority s11(a)
governed by General deduction for expenditure in producing income
may unlock Business travel, flights and accommodation
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Facebook and Instagram (Meta) ad spend
Deductible
Paid Facebook, Instagram and other Meta advertising for the business is deductible.
You can claim this · Sole proprietor or freelancer
The deduction rests on the ads being in the production of income and not of a capital nature, which ordinary campaign spend is. Keep the Meta billing receipts, because the platform invoice is the document SARS wants, not the card swipe.
Where people go wrong
Boosting posts from a personal profile and paying with a personal card, then having no invoice in the business name at all. Without a tax invoice or platform receipt showing the business, the claim is very hard to defend, and a VAT input claim is impossible.
Does buying it save you tax?
Deductible, so you recover your marginal rate on it, not the whole spend. Do not raise the ad budget in March just to reduce taxable income.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Flyers, pamphlets and door to door drops
Deductible
Printing and distributing flyers and pamphlets is fully deductible.
You can claim this · Sole proprietor or freelancer
Both the printing bill and what you pay distributors to hand them out or drop them in postboxes are deductible. If you pay casual distributors in cash, you still need a record of who was paid, how much and when.
Where people go wrong
Cash payments to flyer distributors with no record at all. The printing invoice is easy to prove, the distribution cash is the part that gets disallowed, and if the same people work for you regularly there may be a PAYE and UIF question too.
Does buying it save you tax?
Deductible, and usually cheap enough that the tax is beside the point. Spend it if the flyers work in your area, not for the deduction.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Free samples of your product given away
Deductible
Stock you give away as samples to promote sales stays deductible, but it must come out of your closing stock properly.
You can claim this · Sole proprietor or freelancer
The cost of the goods was already deductible as purchases. What matters is that the sampled goods are no longer in your closing stock figure at year end, otherwise you effectively reverse your own deduction. Keep a simple record of what went out as samples.
Where people go wrong
Not distinguishing samples given to customers from stock taken for your own household. Stock you consume privately is not deductible, and for a VAT vendor it can trigger a deemed supply. Food and drink samples also raise the VAT entertainment question, so check the classification before claiming input tax.
Does buying it save you tax?
The tax effect is neutral to mildly helpful. Sampling works or it does not on its own commercial merits.
Authority s22
excluded by Entertainment input tax is denied
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Google Ads spend for the business
Deductible
Money you spend on Google Ads to bring in customers is a normal deductible business expense.
You can claim this · Sole proprietor or freelancer
Advertising to produce income is deductible in the year it is incurred, even though the leads it generates may arrive later. If you are VAT registered, note that Google bills a South African business through its local entity or as imported electronic services, so check which invoice you actually received before claiming input tax.
Where people go wrong
Claiming the full card statement when the same Google account also runs ads for a side hustle, a personal project or a friend's business. Only the portion that is your trade is deductible, and SARS will ask for the ad account invoices, not the bank line.
Does buying it save you tax?
It is deductible, which means it costs you the spend less your marginal rate. Advertising is worth doing when it brings in profitable work, never because it is deductible.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Logo design and brand identity
Depends
A modest logo or brand refresh is usually claimed as a running cost, but a large brand build can be treated as capital.
The answer turns on the facts · Sole proprietor or freelancer
The question is whether you paid for a passing marketing cost or created an asset of lasting benefit. A designer's bill for a logo and a colour palette is typically expensed. A full corporate identity project, plus trade mark registration and legal fees, looks much more like capital creation and SARS may treat it that way. Trade mark registration costs in particular sit on the capital side.
Where people go wrong
Assuming that because it is called marketing it must be deductible. The bigger and more enduring the brand asset, and the more legal protection you register around it, the weaker the deduction gets. Also note that the allowance for acquired intellectual property does not simply cover a brand you created yourself.
Does buying it save you tax?
If it is expensed you get your marginal rate back. If it is capital you get nothing now. Either way, a logo is a business decision, not a tax one.
governed by General deduction for expenditure in producing income
may unlock Base cost includes far more than the purchase price
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Market research and customer surveys
Deductible
Market research for an existing business is deductible, but do not expect it to qualify for the research and development incentive.
You can claim this · Sole proprietor or freelancer
Research into your customers and your market is a normal trade expense. The enhanced research and development deduction is aimed at scientific and technological research, and market research, market development and sales promotion are specifically excluded from it. That is a distinction people get wrong when they see the words research and deduction together.
Where people go wrong
Two of them. Claiming the enhanced research and development allowance for market research, which does not qualify. And claiming research done before the business began trading, because expenditure incurred before you start trading has its own limiting rule rather than being freely deductible.
Does buying it save you tax?
Deductible at your marginal rate as an ordinary expense. Do the research because guessing is expensive, and do not expect an enhanced incentive for it.
Authority s11(a)
excluded by Research and development deduction
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Paying an influencer or a content creator
Deductible
Paying an influencer to promote your business is deductible, provided you can show what you paid for and to whom.
You can claim this · Sole proprietor or freelancer
Cash fees are straightforward. Where you send free product instead of cash, you are effectively bartering: your cost is still deductible, and there are consequences on the influencer's side because a gifted product received for services is income in their hands.
Where people go wrong
Paying influencers into personal accounts with no invoice, no contract and no proof of the posts. That is the classic disallowed claim. Two further points: a South African influencer must be able to invoice you, and paying a foreign influencer can raise a withholding question, so check before you pay across the border.
Does buying it save you tax?
Deductible at your marginal rate. Influencer spend swings wildly in effectiveness, so treat it as an advertising test with a measurable result, not a write off.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Radio, newspaper and magazine advertising
Deductible
Radio spots and print adverts for the business are ordinary deductible advertising.
You can claim this · Sole proprietor or freelancer
Both the media cost and the cost of producing the advert are deductible when incurred for the trade. Community newspaper and community radio placements are treated exactly the same as national media.
Where people go wrong
Placing a congratulations or condolence notice, or an advert for a club or church you support, and claiming it as business advertising. If the notice does not promote the business it is a donation or a personal cost, not advertising.
Does buying it save you tax?
Deductible at your marginal rate. Real answer: measure it. Print and radio are easy to keep paying for out of habit long after they stop bringing anyone in.
Authority s11(a)
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Running a customer loyalty or points programme
Depends
You deduct the cost of loyalty rewards when the obligation is actually incurred, not when you provision for points that might one day be redeemed.
The answer turns on the facts · Company
The software, the cards and the running costs of the programme are ordinary deductible expenses. The reward liability is the difficult part: an accounting provision for unredeemed points is not automatically deductible, because the deduction generally requires expenditure actually incurred. Where the rewards relate to income already received under a contract, the allowance for future expenditure on contracts may be the right route, but it has its own strict requirements.
Where people go wrong
Deducting the accounting provision for outstanding points straight off the financial statements. Accounting treatment and tax treatment part ways here, and this is a common audit adjustment. Get the treatment confirmed rather than assuming the AFS number is the tax number.
Does buying it save you tax?
The programme costs real money and the deduction follows the real cost. It is worth it only if it changes customer behaviour.
Authority s24C
governed by General deduction for expenditure in producing income
governed by Allowance for future expenditure on contracts
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Shopfront signage and an illuminated sign
Wear and tear
A permanent sign you own is a business asset written off over time, not an expense in one go.
Written off over time, not all at once · Sole proprietor or freelancer
A fitted or illuminated sign has lasting value, so it is capital and generally comes off through the wear and tear allowance over its expected life. Temporary banners, a corflute board or a pavement A frame are cheap and short lived and are normally just expensed. Small assets below the SARS small item write off threshold can typically be written off in full in the year.
Where people go wrong
Treating an expensive built in sign as advertising and deducting it all in year one. It is an asset. The related trap is the other side: if you sell the business or scrap the sign, a recoupment may be triggered on what you already wrote off.
Does buying it save you tax?
You get relief either way, just spread out. Signage is worth it for the walk in traffic, not the allowance.
Authority s11(e)
governed by Wear and tear on business assets
may unlock Recoupment when an asset is sold
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Sponsoring a local sports team or club kit
Depends
Sponsoring a local team is deductible if your business gets real advertising out of it, and not if it is generosity with your name on it.
The answer turns on the facts · Sole proprietor or freelancer
Your logo on the kit, on the field boards or in the fixture programme, aimed at a crowd that includes your customers, supports a deduction. The weaker the link, the weaker the claim. Sponsoring the team your own child plays in is the hardest version to defend, because the private motive is obvious.
Where people go wrong
Sponsoring your child's school team and claiming it as marketing. SARS looks at the dominant purpose. If the money follows the family rather than the customers, expect it to be disallowed, and if the club is not an approved public benefit organisation you do not get a section 18A deduction either.
Does buying it save you tax?
Sometimes deductible, often not. Sponsor the team because you want to, and treat any deduction as a bonus you must be able to justify.
Authority s11(a)
governed by General deduction for expenditure in producing income
may unlock Section 18A donation deduction
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Sponsoring an event or a conference
Deductible
Sponsorship is deductible when you are buying advertising exposure, and is not deductible when it is really a gift.
You can claim this · Sole proprietor or freelancer
The test is what you got for the money. Branding on the banner, logo on the programme, a mention from the stage or a stand at the event are all advertising benefits and support the deduction. Keep the sponsorship agreement that sets out what the sponsor receives.
Where people go wrong
No written agreement and no visible branding. If nothing on paper shows what the business received, SARS can recharacterise the payment as a donation, which may also drag in donations tax if it went to a person rather than an approved organisation.
Does buying it save you tax?
Deductible where it is genuine advertising, so you recover your marginal rate. If you would have paid it anyway out of loyalty or friendship, be honest that it is a donation and treat it as one.
Authority s11(a)
governed by General deduction for expenditure in producing income
may unlock Donations tax on gifts
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Taking a client out for lunch or dinner
Deductible
A genuine client meal is deductible for income tax, but you may not claim the VAT back on it.
You can claim this · Sole proprietor or freelancer
This is the split almost nobody knows. For income tax, entertaining a client in the course of your trade is a normal business expense. For VAT, entertainment input tax is specifically denied, so a VAT registered business deducts the full VAT inclusive amount for income tax and claims nothing on the VAT return.
Where people go wrong
Two traps. First, VAT vendors routinely claim the input tax on restaurant slips and it is simply not allowed, which is easy for SARS to spot on an audit. Second, writing off meals where no client was present. Note on the slip who you were with and what the business purpose was, at the time, not months later.
Does buying it save you tax?
It reduces taxable income, so you recover your marginal rate on the bill and nothing more. Do not book a table you did not need in order to save tax, you still pay most of the bill.
Authority s11(a)
excluded by Entertainment input tax is denied
governed by Client entertainment is deductible for income tax but blocked for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Taking a client to a rugby match or a corporate box
Deductible
Hosting a client at a sports event is deductible for income tax, and the VAT on it is denied.
You can claim this · Sole proprietor or freelancer
A box, tickets, and the food and drink that go with them are entertainment. Income tax allows the deduction where the purpose is producing income, VAT blocks the input tax entirely. Keep a record of which clients attended each fixture.
Where people go wrong
A season ticket or a box used mostly by you, your family and your friends, with the occasional client, claimed in full. Only the genuinely client facing use stands up, and personal use of a box you paid for through the business is a benefit you cannot ignore. VAT vendors also keep wrongly claiming input tax here.
Does buying it save you tax?
Deductible, but you still pay most of it. A corporate box is a relationship decision with a tax discount, not a tax strategy.
Authority s11(a)
excluded by Entertainment input tax is denied
governed by Client entertainment is deductible for income tax but blocked for VAT
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
Vehicle branding and a full vehicle wrap
Deductible
The cost of branding or wrapping a vehicle is normally deductible advertising, even though the vehicle itself is not.
You can claim this · Sole proprietor or freelancer
The wrap has a short life, gets removed or replaced, and its purpose is advertising, so it is usually expensed rather than added to the cost of the vehicle. Removal and replacement costs are treated the same way.
Where people go wrong
Believing that wrapping your private car turns it into a business vehicle and unlocks the running costs. It does not. Branding a car changes nothing about how the fuel, insurance and wear and tear are apportioned, and it does not create business kilometres. You still need a logbook, and for VAT registered users the motor car input tax denial still applies to the car itself.
Does buying it save you tax?
The wrap is deductible, the car is not. Wrap the vehicle for the exposure, and do not let anyone tell you it converts private travel into business travel.
Authority s11(a)
excluded by Travel allowance deduction against business kilometres
excluded by Motor car input tax is denied
governed by General deduction for expenditure in producing income
Marketing
Research, not advice.
This has not yet been checked against the Act or a SARS guide, so treat it as a starting
point and a question for your practitioner, not a claim you can make.
