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Tax Savings: A Guide to Business Deductions in South Africa

Running a business in South Africa isn’t just about generating income—it’s also about being strategic with what you keep. One of the most effective ways to stretch your rands further is by taking full advantage of SARS-approved tax deductions.


As a business owner, it’s important to understand what counts as a deductible expense, how to document it, and how to legally lower your taxable income.


In this blog post, we break down the top deductions available to South African businesses to help you apply these to your own business.


Why Tax Deductions Matter


A tax deduction reduces your business’s taxable income by allowing you to subtract qualifying expenses “incurred in the operation of a business.” In other words, if you earn R1 000 000 in a financial year and incur R200 000 in deductible expenses, your taxable income becomes R800 000. SARS will then levy tax on the R800 000 rather than the full R1 000 000.


Get our Maximise Your Business Deductions Playbook - click here to download!


1. Everyday Operating Expenses

These are the bread-and-butter costs of running your business. Because they directly support your income-earning activities, SARS typically lets you deduct them in full:


  • Rent & Utilities: Office rent, electricity, water and municipal rates

  • Salaries & Wages: Employee pay, PAYE, UIF and SDL contributions

  • Telecommunications: Internet, phone lines and data (apportion if you also use them privately)

  • Office Supplies: Stationery, printer cartridges, software subscriptions

  • Marketing & Advertising: Online ads, brochures, event sponsorships

  • Professional Fees: Accounting, legal advice, IT consulting

  • Bank & Finance Charges: Monthly account fees, merchant-card charges, interest on business overdrafts

  • Insurance Premiums: Fire, theft, professional indemnity, business-interruption cover


Tip: Always keep supporting documents—invoice copies, receipts, contracts—because SARS requires proof that each expense was incurred and is “wholly and exclusively” for the business.


2. Home Office Deductions

If you work from home more than 50% of the time and have a clearly dedicated workspace, you can claim a portion of:

  • Rent or bond interest

  • Electricity and water

  • Rates and taxes

  • Repairs to the workspace

Note: Your workspace must be exclusively used for business, and SARS may request proof such as floor plans and expense breakdowns.



3. Motor Vehicle & Travel Expenses

Whether you own, lease or hire, business travel counts:

  • Fuel, Maintenance & Repairs: 100 % deductible if the vehicle is used exclusively for business.

  • Leasing Charges: Deduct lease payments; if there’s private use, keep a logbook to apportion.

  • Public Transport & Accommodation: Taxi, train fares and overnight subsistence when you travel outstation.

Tip: A detailed logbook (business vs. private kilometres) is your best friend when SARS asks for proof.

4. Capital Expenses & Depreciation

You can't claim the full value of an asset in the year you buy it. Instead, SARS lets you deduct a portion each year through wear-and-tear allowances.

Here’s a quick guide:

Asset Type

Annual Deduction

Computers & tech

33% for 3 years

Office furniture

10% for 10 years

Bakkies/Commercial

20% for 5 years

Passenger vehicles

20% (limited to R500,000 value)

Example: Buy a laptop for R30,000 → claim R10,000 per year over 3 years.



5 Staff-Related Deductions

Investing in your team comes with tax perks:

  • Retirement Fund Contributions: Employer contributions to pension/provident funds are fully deductible (within annual limits).

  • Medical Scheme Subsidies: Deduct any employer-paid portions of staff medical aid.

  • Training & Bursaries: Fees for staff training (or bursaries for employees’ children up to R15 000 per child) qualify.


Upskilling your team isn’t just good business—it’s tax-smart too.



6. Learnership Allowance (Section 12H)

To encourage businesses to train and develop employees, SARS offers a Learnership Allowance as an additional deduction:


Who qualifies?

  • Employers who register employees or new hires on a registered learnership with a SETA-accredited provider.


What can you claim?

  • R40,000 per learnership for able-bodied learners, or R60,000 for learners with disabilities per tax year.

  • A completion allowance of R40,000 or R60,000 can also be claimed in the year the learner successfully completes the learnership.


This means you can claim up to R80,000–R120,000 per learner over the course of their programme.


To qualify, the learnership agreement must be signed, registered with a SETA, and kept on file.



7. Bad Debts & Doubtful Debts

If a client doesn’t pay and you’ve made reasonable efforts to collect, you can write off that debt and claim it as a deduction.


Even better—SARS allows you to create a provision for doubtful debts, based on historical trends and risk profiles.


  1. Bad Debts Written Off: The actual irrecoverable debt (in your books) that has been formally written off can be claimed.

  2. Doubtful Debt Provision: Instead of waiting for a specific debt to become irrecoverable, SARS allows you to create a provision for doubtful debts under certain stringent conditions (e.g., aging analysis, credit control policies showing likelihood of default).


Keep proof of communication, invoices, and your ageing analysis.



8. Research & Development (R&D) Allowance

Doing innovative work? You may qualify for a 150% super-deduction on qualifying R&D costs.


You’ll need:

  • A qualifying R&D activity in science or tech

  • Pre-approval from the Department of Science & Innovation


This is a powerful incentive, especially for startups in tech, manufacturing, and science.



9. Donations to Registered Charities (Section 18A)

If a company donates to a SARS-approved PBO (Section 18A), those donations are deductible up to 10 % of taxable income. 

  • Section 18A Certificate: The recipient PBO must issue this certificate to the donor.

  • Cap: The maximum annual deductible donation is 10 % of your net income before deductions.

  • Carry Forward: Unused donation deductions may be carried forward to the next year (up to five years).



10. Turnover Tax for Micro-Businesses

If your annual turnover is below R1 000 000 and you register as a turnover tax vendor instead of normal income tax, you pay a single tax based on turnover (instead of claiming expense deductions). However:


  • You cannot separately deduct operating expenses.

  • The turnover tax rates range from 0 % to 3 % of turnover (depending on the total).

  • Sometimes this is simpler for very small businesses, but many SMEs opt for normal tax so they can claim expense deductions.xpenses.



11. Interest & Finance-Related Deductions


A. Interest on Business Loans

  • Deductible in Full: If you borrow money purely for your business (e.g., to fund working capital), the interest portion of your instalments is deductible.


B. Finance Lease Rentals

  • Operating Leases: Lease rentals for equipment or vehicles are deductible as an operating expense (again, subject to business-use apportionment).


  • Capital Leases (Finance Leases): The interest element of each instalment is deductible; the asset itself is capitalized and depreciated as noted earlier.


12. Capital Allowances on Special Assets


Section 12C (Manufacturing Machinery)

Manufacturing machinery used in an RSA factory can qualify for an additional accelerated write-off. If the asset is new and used directly in manufacturing, you may be able to write off up to 100 % in the first year (phase-out started in 2023, but partial rates may still apply).


  1. SBC Tax

A Small Business Corporation (SBC) is a tax classification that gives qualifying businesses significant tax breaks—including reduced tax rates and accelerated depreciation.


To qualify as an SBC:

  • Your business must be a registered private company, close corporation, or co-operative

  • Your annual turnover must be below R20 million

  • All shareholders must be natural persons (no trusts, companies, or other entities)

  • Not more than 20 % of income must come from passive investments or rendering personal services (unless you employ at least three full-time staff members)


    Compare this to the flat 27 % corporate tax rate for standard companies—massive savings if you qualify!



Record-Keeping & SARS Compliance

To substantiate any deduction, SARS requires you to provide:

  1. Invoices/Receipts/Bills: Detailed supplier invoices showing VAT registration, where applicable.

  2. Contracts/Agreements: For leases, hire purchases, or large capital projects.

  3. Logbooks & Kilometre Records: For motor vehicles with mixed (business + private) use.

  4. Bank Statements: To show payment flow for bank charges, loan interest, rent, etc.

  5. Payroll Records & EMP201/EMP501 Reconciliations: For wages, UIF, SDL and PAYE obligations.

  6. Depreciation Schedules & Asset Registers: Listing cost, date of acquisition, and depreciation claimed.


Tip: Keep electronic copies (PDFs) of all documents, organized by tax year. SARS may audit any deduction within five years of filing your return.


Final Tips for Smart Tax Deductions

  1. Plan Ahead – Maintain a separate business bank account and store all receipts—this simplifies the audit trail.

  2. Track everything – keep digital receipts and logbooks

  3. Review annually – tax rules change after every Budget Speech

  4. Work with a tax professional – the right advice pays for itself

  5. Get our Maximise Your Business Deductions Playbook - click here to download!



💬 Let’s Help You Maximise Your Deductions

At HM Accounting, we specialise in helping business owners reduce their tax burden and improve financial clarity. Whether you’re a sole proprietor, company director, or freelancer, we’ll help you get the most out of your business expenses—and stay 100% compliant with SARS.


View our services here

WhatsApp: +27 67 121 3652

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