Claim entertainment expenses correctly or prepare to face this huge penalty

Simangele Mzizi, Fsp Business, 02 Sep. 2014

Tags: entertainment expenses, claiming vat on entertainment, vat, sars, penalties for claiming entertainment expenses incorrectly

From a Vat perspective, entertainment is the provision of food, beverages, accommodation, entertainment, amusement, recreation or hospitality of any kind you either directly or indirectly give your employees or anyone connected to your enterprise. This is according to Section 1 of the Vat Act.

The good news is you can claim some entertainment expenses.

It’s crucial that you handle your claims correctly. If you don’t, for example you claim input tax back on the wrong entertainment item, SARS will slap you with this huge penalty…

You’ll face this hefty penalty if you claim entertainment expenses incorrectly

According to the Practical Vat Loose Leaf Service, if you’ve claimed Vat on entertainment and you shouldn’t have and SARS finds out, SARS will reverse the deduction and penalise you 10% and monthly interest.

In this tough economy, parting with large sums of money is the last thing you want.

Getting this penalty also puts a “mark” on your behaviour. This means SARS will audit you frequently because it doesn’t trust you anymore with your Vat affairs.

The good news is you can avoid these penalties if you know about entertainment items you can’t claim input tax on.


*********** Recommended Product ************

Confidential: 13 Vat secrets SARS doesn’t want us to publish

These secrets will give you insider information on how to red-flag potential Vat risk areas, before the SARS team does.

Click here to find out what they are




Here are the entertainment items you cant claim input tax on


  • Expenses for entertaining clients;

  • Subscriptions to social and sporting clubs;

  • Expenses for exempt supplies;

  • Private or personal expenses;

  • Gifts for staff;

  • Traffic fines;

  • Car rental;

  • Your office Christmas function (even if it’s compulsory for staff to attend); and

  • Any other office party (e.g. birthdays, kitchen teas, stork parties, bachelor parties).

You’ll get a full list of entertainment items you can’t claim input tax on in the Practical Vat Loose Leaf Service.

The bottom line: You must claim entertainment expenses correctly, it’s the only way to avoid a10% penalty.

Related articles:




RSS Facebook Share the experience
Accounting and Tax

  • Accounting
  • Allowances and deductions
  • Audit/Assessment
  • Capital gains tax
  • Dividends
  • Donations Tax
  • Exports and imports
  • Fringe benefits
  • Input tax
  • Provisional tax
  • Sars
  • Tax basics
  • Tax invoices
  • Tax returns
  • Vat basics
  • Vat registrations
  • Vat return
Premium Services
  • Company Registration
  • Objections
  • PAYE
  • Trusts
  • Turnover Tax
  • UIF
  • Wear and Tear
Our experts
KC Rottok
Andre van Staden Annja Louca Gerhard Badenhorst Mark Samowitz James McKerrell Alan Lewis
how to get my tax number online[read more]
Published on 16 Feb. 2018 1 answer
Need some help on correcting payslips taken over from outsourced payroll person. As soon as the company pays ANYTHING...[read more]
Published on 06 Feb. 2018 1 answer
Dear Sir, Please advise the CGT calculation in the following scenario: Close corporation with one member purchased...[read more]
Published on 18 Jan. 2018 1 answer
Video Archive Video club

Your library of Free eReports
View full library
SARS Tax Tables 2016/2017 Download

Simply click download for your FREE SARS Tax Tables 2016/2017 to ensure you calculate your tax correctly.