Understanding Income Tax Deductions: Don’t Leave Money on the Table

Insights on common deductions small business owners can claim.

Throughout our experience, one of the most common mistakes I’ve seen small business owners make — across townships, suburbs, and industrial parks — is this: they pay too much tax because they don’t claim what’s legally theirs.

Tax isn’t just about what you owe. It’s also about what you can deduct — and many SMMEs in South Africa are unknowingly leaving thousands of Rands on the table.

Let’s unpack what you can (and should) be claiming — and how to do it right.

1. What Are Tax Deductions?

• A tax deduction is a legitimate business expense that reduces your taxable income. The lower your taxable income, the less tax you pay.

• But to claim deductions, you must have proof of the expense, and it must be directly related to your business operations.

2. Common Deductions You Shouldn’t Miss

• Business Travel Expenses

  • If you or your staff use a car for business purposes — whether it’s delivering goods, attending meetings, or sourcing stock — those trips may be deductible. You’ll need:

    • A logbook that separates business from private travel.

    • Fuel and maintenance records.

• Home Office Expenses

  • Working from home? You may be able to deduct a portion of your:

    • Rent or bond interest

    • Utilities (electricity, water)

    • Internet and phone

  • The catch? Your home office must be a dedicated space used exclusively for business.

• Depreciation on Equipment

  • Bought a laptop, printer, or machinery for your business? SARS allows you to claim wear and tear over time. This often-overlooked deduction can reduce your taxable income significantly — especially for equipment-intensive businesses.

• Professional Services & Fees

  • Fees paid to accountants, tax practitioners (like us!), legal advisors, and consultants are deductible. Even CIPC filing fees and industry memberships may qualify.

• Marketing & Advertising

  • Expenses spent on social media marketing, flyers, radio ads, website hosting and branding are all tax-deductible — provided they are directly tied to business promotion.

• Salaries & Wages

  • If you pay staff — formally or informally — and keep records, these payments can be deducted. Be sure to stay compliant with PAYE and UIF requirements.

3. The SARS Red Flags

• SARS is becoming increasingly automated and data-driven. To avoid trouble:

  • Keep receipts, invoices, and proof of payment for all deductions.

  • Use a proper accounting system to categorise expenses.

  • Avoid inflating or fabricating expenses — SARS audits are thorough and unforgiving.

4. Provisional Tax & Advance Planning

• SMMEs that are provisional taxpayers can manage tax liability smartly by forecasting their income and expenses accurately. This can prevent nasty surprises and penalties at year-end.

Let MCG Advisory Help You Get It Right

• We specialise in helping South African small business owners optimise their tax position while staying 100% compliant. Our team ensures you:

  • Don’t miss legal deductions,

  • Prepare properly for tax season, and

  • Avoid unnecessary SARS penalties or stress.

Final Word

• Tax doesn’t have to be a mystery — and it shouldn’t be an annual panic. With the right support and systems in place, you can make the most of your hard-earned income and reinvest it into growing your business.

• Contact MCG Advisory today for a tax review — we’ll help you uncover deductions you didn’t know you had and ensure SARS stays off your back.