YOU BOUGHT A THING.WHAT HAPPENS?

Deductible for a business owner where it maintains the skills of the trade you already carry on, not where it qualifies you for something new.

The answer turns on the facts · Sole proprietor or freelancer

The distinction that matters is maintaining versus acquiring. A plumber's course on a new pipe system, or the CPD hours your professional body requires you to keep your licence, maintains an existing income earning ability and is generally a revenue expense. A course that qualifies you to enter a new field is closer to capital and is much harder to sustain. If you are a salaried employee rather than a business owner, the answer is different and much worse, see the separate item.

A suit is not deductible, no matter how strictly your job requires you to wear one.

There is no relief for this · Anyone

Ordinary clothing is private expenditure even when you would never wear it outside work and even when your employer or your profession requires it. The test is not whether you like the clothing or whether you would have bought it otherwise, it is whether the item is ordinary clothing capable of everyday wear. Suits, smart dresses, shirts, ties and formal shoes all fail. The line is crossed only where clothing is genuinely distinctive as a uniform or genuinely protective, which is why branded workwear and safety boots do get through.

Deductible for the employer, and exempt for the employee up to a cap that depends on the employee's remuneration and the level of study.

You can claim this · Company

A bursary granted to a relative of an employee is exempt only if the employee's remuneration is below a prescribed proxy threshold, and only up to a monetary cap that differs for schooling versus higher education. Anything above the cap, or any bursary where the employee earns over the threshold, is a taxable fringe benefit in the employee's hands and must run through payroll. A larger cap applies where the relative has a disability.

The annual Compensation Fund assessment is a deductible business cost, and filing the Return of Earnings is compulsory for almost every employer.

You can claim this · Sole proprietor or freelancer

Every employer with employees must register with the Compensation Fund, submit an annual Return of Earnings, and pay an assessment based on payroll and the risk rating of the industry. That assessment is deductible under the general deduction rule. A letter of good standing, which you need for most commercial and government contracts, only issues once the return is filed and the assessment paid. Domestic workers in private households are now covered too.

Cleaning staff for your business premises are a fully deductible business cost.

You can claim this · Sole proprietor or freelancer

It makes no difference whether you employ the cleaner yourself or pay a cleaning company. If you employ the person directly, all the normal payroll duties apply: PAYE where the threshold is crossed, UIF, COIDA and an IRP5. If you use a contractor, keep the invoice. Where the premises are partly private, for example a room in your home, apportion.

Commission paid for sales made is fully deductible, and if the person is on your payroll it is remuneration with PAYE.

You can claim this · Sole proprietor or freelancer

The deduction is straightforward. The classification is where it goes wrong: a commission only salesperson is very often still an employee for tax, not an independent contractor, and PAYE applies at the commission earner rate. Commission is variable remuneration, which has its own timing rule for accrual in the employee's hands. Commission paid to a genuinely independent agent running their own business is a normal expense against an invoice.

Deductible where the conference relates to the trade you already carry on, with any private portion of the trip stripped out.

Claim the business share only · Sole proprietor or freelancer

The delegate fee, flights, accommodation and reasonable meals connected to a genuine business conference deduct. If you extend the trip for a holiday, or take a spouse who has no role in the business, that portion is private and comes out. Keep the programme or agenda, not just the invoice, because the agenda is what proves the business connection. VAT input tax on entertainment elements is generally denied even where the income tax deduction stands.

The cost is deductible for you, and it can be tax free in the employee's hands if the bursary conditions are met.

You can claim this · Company

The employer deducts the cost as a staff expense. For the employee, a bona fide bursary or scholarship granted to enable study at a recognised institution is exempt, subject to conditions and monetary caps set in the Act. A key condition is the repayment undertaking: the employee must be obliged to repay if they fail to complete their studies for a reason other than death, ill health or injury. There is a separate, more generous treatment where the employee has a disability.

Wages for a domestic worker at your private home are a private cost and give you no tax deduction.

There is no relief for this · Anyone

This is private and domestic expenditure, which the Act specifically blocks. It does not become deductible because you work from home, and it does not become deductible because you could not work without childcare. The only narrow exception is a genuine, properly apportioned share of cleaning that relates to a qualifying home office area, and even that is only available to taxpayers who can claim a home office at all. You do still have real obligations as a domestic employer: UIF registration and contributions, and COIDA now covers domestic workers.

A deductible staff welfare cost alongside the team-building item already listed in the catalogue.

You can claim this · Sole proprietor or freelancer

Ordinary deductible cost of employing people.

Deductible for the employer, treated as a fringe benefit on the employee, who then deducts it as if they had contributed it themselves.

You can claim this · Company

The employer claims its contributions to an approved fund as a deduction, subject to the limits in the Act. The employee is taxed on the employer contribution as a fringe benefit, and the same amount is then treated as a contribution made by the employee, so it feeds into the individual retirement contribution deduction which is capped by percentage of remuneration or taxable income and an annual rand ceiling. In most cases the two legs largely cancel out, unless the employee is already over the cap.

ETI is not a deduction, it is a reduction of the PAYE you pay over to SARS for hiring qualifying young employees.

You can claim this · Company

For each qualifying employee in a qualifying age band, earning within a prescribed wage range, hired after the qualifying date, the employer reduces the monthly PAYE payment by a calculated amount for a limited number of months. It is claimed on the EMP201, not on the income tax return, and it does not reduce the salary deduction, which stays fully claimable. The employer must be tax compliant and registered for PAYE. Special rules apply in special economic zones and to certain designated industries.

Deductible for the employer if it is a genuine work health and safety cost, not simply home furniture provided as a perk.

The answer turns on the facts · Sole proprietor or freelancer

Where the employer retains ownership of the equipment, it is a business asset written off under wear and tear; where it becomes the employee's property, it may instead be a taxable fringe benefit.

Labour broker fees are deductible, but you must withhold PAYE from the broker unless they show you a valid exemption certificate.

You can claim this · Sole proprietor or freelancer

A labour broker as defined provides other people to work for a client. The fee is a normal business expense. The compliance point is that payments to a labour broker are remuneration for PAYE purposes unless the broker holds a valid exemption certificate, commonly called an IRP30, and gives you a copy. Get the certificate before you pay, check it covers the current period, and keep it on file with the invoices.

Deductible for the business, but a gift to an employee is generally a taxable fringe benefit that should go through payroll.

You can claim this · Sole proprietor or freelancer

The cost is an ordinary staff expense for the employer. On the employee side, the Seventh Schedule taxes assets given to an employee free or at a reduced price, and vouchers or gift cards are treated as cash equivalents, which makes them squarely taxable. There is a specific exclusion for long service awards subject to conditions and a monetary limit, but that is a separate, narrow rule and does not cover a general Christmas gift.

Premiums are deductible for the employer, and the employer paid premium is generally a taxable fringe benefit for the employee.

You can claim this · Company

Group risk cover for employees is a staff cost and deducts. Where the cover sits inside an approved retirement fund, the contribution is treated under the retirement fund rules; where it is a standalone group scheme, the employer paid premium is generally a taxable benefit in the employee's hands. Whether the eventual payout is taxable depends on the type of benefit and how the policy is structured, and the rules changed over time for income protection policies, so do not assume the position from an older policy document.

You do not decide this by writing contractor on the invoice, and getting it wrong makes the unpaid PAYE your problem, not theirs.

The answer turns on the facts · Sole proprietor or freelancer

The payment is deductible either way, so the money at stake is not the deduction, it is employees' tax. The Fourth Schedule and SARS practice look at the substance: who controls how and when the work is done, whose tools and premises are used, whether the person carries their own risk of profit and loss, whether they can send a substitute, and whether they serve other clients. There are also statutory presumptions that treat a person as not independent where they work mainly at your premises under your control or supervision. Separately, where the contractor works through their own company or trust and looks like an employee of yours, that entity can be a personal service provider, which puts you under a duty to withhold PAYE at a high rate on payments to it.

Advertising a vacancy is a deductible business expense in the year you place the advert.

You can claim this · Sole proprietor or freelancer

This covers job board listings, newspaper classifieds, LinkedIn job slots and printed notices. Keep the invoice and note which role it was for, since it is the kind of small line item that a verification will ask you to explain. Same pre trade caveat as recruitment fees if the business has not started trading.

A business paying a laundry to clean staff uniforms deducts it; an employee washing their own work clothes at home gets nothing.

The answer turns on the facts · Sole proprietor or freelancer

Where the business contracts a laundry service for uniforms, overalls or restaurant linen, the invoice is a deductible operating cost. Where the clothing being cleaned is ordinary clothing rather than a uniform, the cost follows the clothing and is private. For a salaried employee, personal laundry or dry cleaning is not on the short list of employee deductions, so there is no claim even for a required uniform.

Deductible for the employer and taxed as ordinary remuneration for the employee, even when it is paid on retrenchment.

You can claim this · Company

Leave actually paid out is a normal wage cost and deducts. For the employee it is remuneration subject to PAYE at their normal rates. An accounting provision for leave that has accrued but has not yet become an unconditional liability is generally not deductible, which is a common difference between the financial statements and the tax computation.

Lending money to an employee is not an expense at all, and an interest free or cheap loan creates a taxable fringe benefit.

There is no relief for this · Company

A loan is a movement of an asset, not expenditure, so there is nothing to deduct when you make it. If the employee never repays and you write it off, the write off may be deductible or it may be treated as remuneration, depending on the facts. Where you charge no interest or less than the official rate of interest, the shortfall is a fringe benefit taxable on the employee and must be run through payroll monthly. Short salary advances repaid within the same month are usually not treated as loans, but check the terms.

Deductible for the employer, and partly tax free for the employee if it meets the long service conditions and stays under the limit.

You can claim this · Company

The Seventh Schedule provides a specific exclusion for an award made for long service, subject to a definition of what counts as long service (an initial unbroken period, and then further periods after that) and a monetary limit. The exclusion applies to the asset given, and any value above the limit is a taxable benefit. Cash paid instead of an asset does not get the same treatment.

Any maternity pay the employer adds on top of the UIF benefit is deductible for the employer and taxable remuneration for the employee.

You can claim this · Company

The UIF maternity benefit itself comes from the fund and is not taxable in the employee's hands, and it is not an employer expense. Where the employer pays a top up so the employee receives a fuller salary, that top up is an ordinary wage cost, deductible, and subject to PAYE and the usual payroll treatment. Statutory maternity leave itself is unpaid under the Basic Conditions of Employment Act unless the contract or policy says otherwise.

Deductible for the employer, taxed as a fringe benefit on the employee, and the employee then gets the medical scheme fees tax credit.

You can claim this · Company

The employer claims the contribution as a staff cost. The Seventh Schedule treats the employer's contribution as a taxable benefit in the employee's hands, which must be shown on the payslip and the IRP5. The employee is then entitled to the medical scheme fees tax credit for themselves and their dependants, which the employer normally applies against PAYE monthly. The net position for the employee is usually much better than paying the contribution from after tax salary themselves.

A legally required health assessment for staff is a deductible employment cost.

You can claim this · Sole proprietor or freelancer

Distinguish from an employee's own out-of-pocket medical costs, which are not deductible for the employer or the employee under the catalogue's existing medical items.

Cash wages are deductible if you can prove the work happened and who you paid, and they still carry PAYE and UIF obligations.

The answer turns on the facts · Sole proprietor or freelancer

The law does not care that you paid in cash, it cares whether you can show the expense was actually incurred in producing income. That means a wage register with names, ID numbers, dates, hours and a signature per payment. Casual and part time workers are not automatically outside the PAYE and UIF net: the thresholds and rules in the Fourth Schedule and the UIF legislation apply on their own terms, not on whether you call the person casual.

Deductible if your spouse actually works in the business and is paid a market related rate for that work.

The answer turns on the facts · Sole proprietor or freelancer

Same test as any family member: real services, market related amount, proper payroll. The salary is taxable in your spouse's hands and needs an IRP5, and PAYE applies once the income crosses the threshold. If you are married in community of property, be aware that trade income from the joint estate is already split for tax in a particular way, so paying a salary on top can double up or muddle the picture. Get the marital regime checked before structuring it.

Deductible if you are self employed and the registration keeps you licensed to trade, effectively nil if you are a salaried employee paying it yourself.

The answer turns on the facts · Sole proprietor or freelancer

For a sole proprietor or a company, the annual registration or licence fee that lets the practice operate is a normal cost of producing income and deducts. Exam fees for admission to a profession you are not yet qualified in look more like acquiring a new income earning capacity, which is a weaker claim. For a salaried employee, the closed list in s23(m) is the problem: professional subscriptions paid personally by an employee are generally not deductible. Where the employer pays the subscription for an employee, the employer deducts it and there is a fringe benefit question to check.

Protective equipment the law or the job requires is deductible for the employer and is not a taxable benefit for the worker.

You can claim this · Sole proprietor or freelancer

PPE is required by occupational health and safety legislation and is squarely a business cost. Boots, hard hats, gloves, high visibility vests, goggles, respirators and hearing protection all deduct in the year bought where they are consumables replaced regularly. Larger, longer lived safety equipment can fall into wear and tear instead, and small items below the write off threshold are typically written off in full. Providing PPE is an employer duty under the OHS Act, not something you may charge back to the worker.

Screening and vetting costs for hiring are deductible business expenses.

You can claim this · Sole proprietor or freelancer

Fees to a vetting bureau, a psychometrist or an assessment provider are part of the cost of staffing the business and deduct in the year incurred. The compliance risk here is not tax, it is data protection and labour law: psychometric testing must be scientifically valid and properly applied, and credit and criminal checks need consent and a defensible link to the job.

What you pay a recruiter to fill a position in an existing business is deductible in the year it is incurred.

You can claim this · Sole proprietor or freelancer

Recruiting for a running business is an ordinary cost of producing income, even though the benefit of a good hire lasts more than a year. The picture changes if the recruitment is part of setting up a brand new business or a new line of trade before any income exists, because pre trade expenditure is treated separately and is only released against income from that trade once it starts.

A referral fee for business actually introduced is deductible, provided it is documented and lawful.

You can claim this · Sole proprietor or freelancer

This is a normal cost of getting income, so it passes the general deduction test. What you need is evidence: who referred what, when, and an invoice or signed acknowledgement of the payment. The recipient must declare it as income. If the arrangement is regular enough it can start to look like remuneration, and in some regulated sectors, for example financial services and medical practice, referral payments are restricted or prohibited by the regulator.

A registered learnership gives you an extra deduction on top of the wages you already deduct, and a further one when the learner completes.

You can claim this · Company

Section 12H provides an annual allowance for each registered learnership agreement in force, plus a completion allowance when the learner finishes, with a larger amount where the learner has a disability. The agreement must be registered with a SETA and must meet the requirements in the section, and the allowance is apportioned where the agreement runs for part of a year. This is in addition to the ordinary deduction for the learner's salary, not instead of it. The section has been extended by successive amendment acts, so confirm it is still in force for your year of assessment.

Deductible for the employer, and for the employee a qualifying severance benefit is taxed on the favourable retirement table, not at the marginal rate.

You can claim this · Company

For the business, retrenchment costs are a cost of the trade and deduct when the liability is incurred. For the employee, a severance benefit paid because of retrenchment, redundancy or reaching a qualifying age is taxed on the retirement lump sum table, which includes a tax free portion, and the employer must apply for a tax directive before paying. Critically, the tax free portion is a lifetime amount aggregated with all previous retirement and severance lump sums, so a prior withdrawal can consume it. Not everything in the package qualifies: leave pay, notice pay, pro rata bonus and outstanding salary are ordinary remuneration taxed normally.

What you pay your staff to work in your business is fully deductible in the year it is incurred.

You can claim this · Sole proprietor or freelancer

The deduction is for the gross cost, not the net amount paid into the bank, so PAYE and UIF withheld from the employee still form part of your deductible wage bill. You must be registered as an employer and run a payroll: EMP201 monthly, EMP501 reconciliation twice a year, and an IRP5 for each employee. The deduction sits in the year the liability was incurred, not necessarily the year it was paid.

Deductible only if the family member genuinely does the work and the pay is what you would pay a stranger for that job.

The answer turns on the facts · Sole proprietor or freelancer

Two things must both be true: real services were rendered, and the amount is market related for those services. If the work is genuine but the salary is inflated, SARS can disallow the excess as expenditure not laid out for the purposes of trade. If no work is done at all, none of it is deductible and the payment is really a gift or a distribution of profit. Keep the same evidence you would keep for any employee: a contract, job description, timesheets or duty records, payslips and an IRP5.

SDL is a deductible cost, and if you train staff you may be able to claim part of it back as a grant.

You can claim this · Company

SDL is payable by employers whose annual payroll exceeds a prescribed threshold, and is calculated as a percentage of leviable payroll. It is deductible as a cost of trade. Employers who register with their SETA and submit a workplace skills plan and annual training report can recover a portion as a mandatory grant, and discretionary grants exist for learnerships and bursaries. That recovery is income when received.

Bonuses you pay staff are deductible, but PAYE must be withheld on them and it is usually withheld too little.

You can claim this · Sole proprietor or freelancer

For the employer this is simply more remuneration and it is deductible. The timing question is when the liability was actually incurred: a bonus that is unconditional and quantified at year end can generally be deducted in that year even if paid later, while a discretionary bonus not yet declared usually cannot. On the employee side, variable remuneration such as a bonus or commission has its own timing rule for when it is treated as accrued and taxed.

Deductible as a staff cost, but VAT input tax on meals is denied and a proper canteen benefit can be taxable on the employee.

You can claim this · Sole proprietor or freelancer

Tea, coffee, milk and basic refreshments for staff and visitors are small operating costs and deduct without difficulty. A subsidised canteen also deducts. For the employee, the Seventh Schedule taxes meals and refreshments supplied by an employer, but with exclusions for meals supplied in a canteen or dining room operated by the employer for staff generally, and for refreshments during working hours. VAT input tax on entertainment, which includes food and drink, is denied except in narrow cases such as certain employer canteens charging a consideration.

The cost of transporting staff is deductible, and free transport in a company vehicle is normally not a taxable benefit for the employee.

You can claim this · Sole proprietor or freelancer

Fuel, the driver, the shuttle contract or the taxi money are all business costs and deduct. On the employee side, the Seventh Schedule generally does not tax transport that the employer supplies for employees as a group between home and work in a vehicle used for that purpose. A cash transport allowance is different: cash paid to the employee is remuneration and is taxed. Input tax on a motor car as defined is denied for VAT, though a bus or a bakkie may fall outside that definition.

Clothing that is a genuine uniform, distinctive and required for work, is deductible for the employer and not taxed on the employee.

You can claim this · Sole proprietor or freelancer

Two things make it work: the clothing must be a real uniform that the employer requires to be worn while on duty, and it must be clearly distinguishable from ordinary clothes, which in practice means branding, a distinctive colour and design, or protective purpose. Overalls, embroidered golf shirts, kitchen whites, security uniforms and branded delivery shirts all qualify. Where those conditions are met, supplying the uniform is not a taxable benefit for the employee under the Seventh Schedule uniform provision.

If you are a salaried employee paying your own study fees, you get no deduction, even if the qualification is directly for your job.

There is no relief for this · Salaried employee

The Act limits what an employee may deduct against salary to a short list, and study costs are not on it. It makes no difference that your employer required the qualification or that it led to a promotion. The routes that do work are the employer paying it as a bursary, which can be exempt in your hands, or the employer reimbursing you against proof, which is generally not taxable if structured correctly.

Deductible where it is genuinely about the business and the staff, but the entertainment and accommodation parts carry VAT and fringe benefit issues.

The answer turns on the facts · Sole proprietor or freelancer

A facilitated team building or strategy session with an agenda is a staff cost and deducts. The more the day looks like a paid holiday, the weaker it gets, and an offsite with overnight accommodation and partners invited needs to be split. VAT input tax on the entertainment element, and generally on accommodation used for entertainment, is denied, so do not claim it. Keep the agenda and the attendance list.

Training that improves staff at the job they already do for you is fully deductible.

You can claim this · Sole proprietor or freelancer

Course fees, materials, the trainer's fee and the venue all deduct in the year incurred. Training an existing employee to do their current job better is a revenue expense. Where the employer pays for a formal qualification rather than a short course, the bursary rules come into play for whether the benefit is taxable in the employee's hands. Keep the invoice and a note of who attended and why.

The employer's share of UIF is a deductible business cost, the employee's share is not yours to claim.

You can claim this · Sole proprietor or freelancer

UIF is split between employer and employee. The employer's own contribution is a cost of employing people and is deductible. The employee's half is deducted from their pay and is part of the gross salary you already claim, so do not claim it twice as a separate expense. Contributions are capped by reference to a prescribed earnings ceiling that changes, so check the current figure rather than assuming.

Apprentice and intern pay is deductible like any wage, and it may also qualify for the learnership allowance or ETI.

You can claim this · Sole proprietor or freelancer

The wage or stipend itself is an ordinary deduction. What people miss is the layer on top: if the apprenticeship is registered as a learnership with a SETA, the s12H allowance applies as well, and if the person is young and paid within the qualifying band, the employment tax incentive may reduce your PAYE payment. A stipend paid to an intern is still remuneration for PAYE and UIF purposes unless a specific exclusion applies, so run it through payroll rather than calling it a bursary.

A staff function is deductible for income tax as a staff welfare cost, but you cannot claim the VAT input tax on it.

You can claim this · Sole proprietor or freelancer

Entertaining your own staff is accepted as expenditure in the production of income, so the venue, catering and drinks deduct. VAT is different: input tax on entertainment is specifically denied, so claim the full VAT inclusive amount as an income tax expense and do not put it in your VAT return. Occasional, modest staff functions are generally not treated as a taxable fringe benefit for employees, but lavish or individually attributable benefits are a different question.