Tax Deductions for SA Small Businesses: What You Can Claim

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The general rule

South African tax law lets you deduct expenses incurred in the production of income that are not of a capital nature. That covers the costs of running and growing the business. Long-lived assets are treated separately, through wear-and-tear allowances.

The everyday deductions

Everyday deductible costs include rent, salaries and wages, stock and materials, bank charges, accounting and legal fees, insurance, marketing and advertising, business travel, phone and internet, software subscriptions, and repairs to business equipment. A business cost you can prove with records comes off your taxable income.

Home office

If you work from a dedicated home office, you can claim a proportion of your home running costs — rent or bond interest, rates, electricity — based on the floor area used exclusively for business. SARS is strict here: the space must be regularly and exclusively used for work and specifically equipped for it. Keep records of the floor area and the costs in case SARS queries the claim.

Vehicles and travel

Business travel is deductible and private use is not, so you need records that separate the two. Keep a logbook distinguishing business from private kilometres; without one, SARS can disallow the claim entirely.

Wear-and-tear (capital assets)

You can't deduct the full cost of a laptop, machine or vehicle in one year. You claim wear-and-tear allowances that write the asset off over its useful life (Small Business Corporations get accelerated write-offs, sometimes 100% in year one for certain assets). The full cost is still deducted, spread over several years.

What you can't claim

Private and domestic expenses, fines and penalties, the capital portion of loan repayments, and entertainment that is personal. SARS checks on audit whether claimed expenses are business costs or personal ones.

Records

Every deduction stands or falls on evidence. Valid tax invoices, a clean separation of business and personal spending (a dedicated business bank account is non-negotiable), and up-to-date bookkeeping give you evidence for each claim. Recording expenses as they happen means none are missed at year-end. That's what our bookkeeping does.

Common questions

Can I claim my cellphone and internet?

The business portion, yes. If a phone or connection is used for both business and private purposes, you claim the business-use percentage — so keep it reasonable and be able to justify the split.

How does the home office deduction work?

You claim a proportion of your home running costs based on the floor area used exclusively and regularly for business. The space must be set up for work and used only for work, so a corner of the lounge doesn't qualify. Keep records of the floor area and costs to support the claim.

Do I need to keep every receipt?

For anything you deduct, yes — SARS can ask you to substantiate claims, and VAT input claims specifically require valid tax invoices. Cloud bookkeeping with receipt capture stores each receipt as you spend.

What happens if I over-claim?

If SARS disallows expenses on audit you'll owe the extra tax plus interest, and potentially penalties if it looks deliberate. We review your expenses so you claim what you're entitled to.

Business tax deductions in South Africa