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User question: I worked for a company until July 2015 as a salaried employee and earned among others a travel allowance. I was retrenched and continued working for them for 2 months at a fixed rate and have subsequently worked for another approximately 4 weeks on an ad-hoc basis and I was paid an hourly rate.
I also worked for a different company as an independent contractor for 3 months. They outsourced me to a 3rd company where I did the actual consulting work.
I want to claim costs such as mobile phone and 3G as well as travelling costs – will I be able to do that? I also know that I can claim against my traveling allowance when I was employed as long as I have a log book. Can I claim my mileage when I was working as a consultant?
Piet Nel, SA Institute of Tax Professionals responds:
The Income Tax Act prohibits an individual from making certain deductions if the expenditure relates to any employment of, or office held by, any person in respect of which he or she derives any remuneration (as defined in the Act).
This prohibition doesn’t apply if the person is “an agent or representative whose remuneration is normally derived mainly in the form of commissions based on his or her sales or the turnover attributable to him or her”.
It would apply to the rental of the mobile phone and the 3G expense.
You are correct that the reduction of the travel allowance will only be made if you can provide a logbook in support of the business travel.
When the income is derived from an independent trade (commonly referred to as being derived as an independent contractor) the above limitation doesn’t apply. A deduction will then be permitted if it meets the requirements of the Income Tax Act.
The deductions must be based on actual expenses incurred and, where applicable, an adjustment must be made to account for private use (of the phone) or private travel.
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PLEASE NOTE: The important deadline dates in the 2015 tax season are:
September 30 2015: Manual/postal submissions
November 27 2015: At a SARS branch (non-provisional)
November 27 2015: eFiling (non-provisional)
January 29 2016: Provisional taxpayers via eFiling
ALSO SEE previous tax questions from users:
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