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A company operates from the owner’s home: are electricity, rates, etc. deductible?

Tuesday, 30 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

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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