The general deduction formula allows a deduction for expenditure that is actually incurred in the production of income, and that is not of a capital nature. Section 23(a) then excludes any expense laid out for the purposes of trade or personal/domestic purposes — the classic 'dual purpose' problem.
Practical examples of deductible expenses include office rent, salaries, accounting fees, stationery, and bank charges, provided they are wholly business-related. Mixed-use items — a vehicle, a phone line, a home office — require apportionment and a defensible basis of calculation.
Capital expenditure (equipment, vehicles, improvements) is generally not deductible outright but qualifies for the wear-and-tear allowance over its useful life. Section 11(e) sets the write-off periods; SARS publishes a list, but a shorter period can be justified with a motivation.
Good record-keeping is the foundation. We help clients set up simple bookkeeping that produces clean, defensible deductions — so that when SARS asks, the answer is already documented.
This article is general information and not advice on your specific circumstances. Please speak to us before acting on it.