{"id":68980,"date":"2021-04-06T10:32:59","date_gmt":"2021-04-06T08:32:59","guid":{"rendered":"https:\/\/www.sage.com\/en-za\/blog\/?p=68980"},"modified":"2026-01-29T15:45:49","modified_gmt":"2026-01-29T13:45:49","slug":"tax-deductible-expenses-for-small-businesses","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-za\/blog\/tax-deductible-expenses-for-small-businesses\/","title":{"rendered":"Tax-deductible expenses for small businesses"},"content":{"rendered":"
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Cash flow is the lifeblood of any new or small business.<\/p>\n\n\n\n

The need to reinvest, so that your business may become sustainable, is at constant odds with the need to cover your business expenses.<\/p>\n\n\n\n

However, many entrepreneurs aren\u2019t sure which expenses can be used to reduce their taxable income, which in turn would improve their cash flow and give their businesses a better chance of success.<\/p>\n\n\n\n

To help you achieve this outcome, we\u2019ll highlight the common business expenses that may be tax-deductible, a few that need special treatment, and the record-keeping needed to ratify your deductions.<\/p>\n\n\n\n

A list of deductible business expenses<\/strong><\/h2>\n\n\n\n

Incurring a qualifying business expense and neglecting to use it to reduce the tax you pay is money down the drain. SARS provides the following definition when establishing whether a business expense is tax-deductible. There is one rule, though: it must be an expense incurred in in the production of your business income, but not of a capital nature.<\/p>\n\n\n\n

Below is a non-exhaustive list of the expenses you may be able to deduct from your taxable income:<\/p>\n\n\n\n

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+<\/sup><\/strong>Only wear and tear on the qualifying assets may be allowed as a deduction as set out in SARS Interpretation note 47.<\/em><\/p>\n\n\n\n

*Incurred before your business began trading, to the extent that said expense would have been allowed as a deduction under S11.<\/em><\/p>\n\n\n\n

^The onus is on the taxpayer to prove that expenses were incurred in pursuit of business.<\/em><\/p>\n\n\n\n

You are also permitted to offset any previous operating losses incurred by your business against your taxable income in the current year, provided an active trade or business of a similar nature is carried on without interruption.<\/p>\n\n\n\n

Given the varied nature of commerce, some of these expenses will be necessary in the operation of your business, and others won\u2019t. The best approach would be to think of every expense as an opportunity to reduce your taxable income, and then to either verify the deductibility yourself or run it past a certified tax practitioner.<\/p>\n\n\n\n

Most often you can deduct the full, qualifying expense in the year it is incurred. But there are cases where the deductible amount doesn\u2019t come so easy.

\n\tDownload your free copy of Quickstart guide to Payroll Tax Year-End<\/a>\n<\/div>\n<\/span><\/p>\n\n\n\n

Nuanced tax-deductible expenses <\/strong><\/h2>\n\n\n\n

Let\u2019s assume you have decided to start a physiotherapy practice, which you will run from your home.<\/p>\n\n\n\n

Wear and Tear (Depreciation):<\/strong> To get your business ready for operation, you\u2019ll need to buy equipment like treatment beds, ultrasound machines, and a computer. Asset costs not exceeding R7,000 can be deducted in full, but any asset that costs more than R7,000 is considered a \u2018capital\u2019 expense and must be written off over time. The value the asset loses each year through wear-and-tear is tax-deductible. SARS has compiled a comprehensive document<\/a> (interpretation note) detailing which assets qualify and how to calculate the annual wear and tear figure thereon.<\/p>\n\n\n\n

Home office expenses: <\/strong>Because you\u2019re running your physiotherapy practice from home, there\u2019ll likely be household expenses that, in essence, contribute to the operation of your business. Water and electricity, building insurance, and Wi-Fi costs are but a few examples. As a result, you are permitted to deduct the portion of these expenses that are applicable to running your business. A general rule of thumb is to work out the size of your office space as a percentage of the total square meterage of your house and then multiply any qualifying costs by that percentage to get to your tax-deductible amount.<\/p>\n\n\n\n

Licenses: <\/strong>You are required to have a license to run a physiotherapy practice. If the license is valid for only one year, then the full amount will be deductible in the year it was incurred. But if the license is valid for a multiyear period, the annual deduction may not exceed the total cost of the license divided by the number of years for which the license will remain in effect.<\/p>\n\n\n\n

It\u2019s all about record keeping<\/strong><\/h2>\n\n\n\n

An in-depth understanding of which expenses can be deducted from your taxable income is a great starting point \u2013 but it won\u2019t mean anything unless that knowledge is matched by a precise record-keeping regime. Here are some examples of the records you must keep:<\/p>\n\n\n\n