Q: I would just
like to clarify how to treat office expenses, if they are in the director’s
name and not the company’s. The business is run from the director’s home, who
owns the company. Electricity, rates etc, are in the director’s name. Can you
still deduct them as a business expenses?
A: The problem
here, that you foresaw, is that the company hasn’t actually incurred the
expenditure and would therefore not meet the requirements of section 11(a) read
with section 23.
The company could, for instance enter into a rental
agreement with the director, and that would create the expense. It is not advisable to use an allowance and
the director may find that section 23(m) prevents the deduction allowed under
section 23(b) against his remuneration.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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