We all want to pay less tax but sometimes we can push the envelope so far that we beg the South African Revenue Service (Sars) to audit us.
According to Wessel Smit of Wessels Smit Associates, most taxpayers tend to be too aggressive in there deductions.
Here are five deductions Smit suggests you should think twice before trying to claim them. By deducting them you could be volunteering for the Sars audit list:
Private expenditure (mortgage interest, rates electricity, repairs to primary residence) as “home study costs”.
- Farming, and especially game farming expenditure, which the taxpayer does not operate as a trade, but really as a “hobby”.
- Holiday homes disguised as “rental trades” where the taxpayer then deducts the operating costs relating to these homes with very little rental income and then creates a loss to off-set against their other income.
- Taxpayers involved in a trade (except salary earners where it is prohibited) to deduct private expenditure as entertainment expenditure
- Motor vehicle expenses deducted against travel allowances by employees where employees do not undertake business journeys. Taxpayers are also fond of manipulating the odometer reading to obtain a higher deduction.
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