Don’t miss out on business travel expenses you can claim as deductions. Follow these three steps…

Simangele Mzizi, Fsp Business, 27 Nov. 2014

Tags: input tax, business travel expenses, claiming input tax on business travel expenses, sars, deductions on business travel expenses, claiming vat

Nowadays, travel has become an important part of business.

It’s not uncommon to have one or two employers regularly traveling to different parts of the world for business.

The good news is, you can recoup many of your business travel expenses. You can do this by claiming the input tax deductions available. And this can greatly improve your cashflow.

But where do you start?

Follow these three steps when it comes to your business travel expenses so you never overlook valid deductions.

Before we get to the three steps, let’s first look at five common business travel expenses and their Vat consequences

1. Air travel – Domestic air tickets include Vat at 14%. You can claim this as an input.
Note: Foreign air tickets are zero-rated for Vat and you can’t claim input tax.
2. Rental of commercial vehicles and busses – You can claim input tax if the bus you rent can carry more than 16 passengers.
3. Car rentalVat is charged at 14% on car rental in South Africa. The bad news is you can’t claim this as an input deduction, unless it’s a single cab bakkie.
Note: While you can’t claim on car rental, you can claim the Vat on insurance, damage, excess and accident administration charge.
AccommodationVat is charged at 14% on accommodation if the owner of the place is a Vat Vendor. This means you can claim back the 14% input tax on business travel accommodation if on a business trip and if you’re away from your place of business for at least one night.
4. Meals and refreshments (including liquor): You can claim the input tax charged on meals if on a business trip and if you’re away from your place of business for at least one night.
Note: If you take a client out to dinner, you can’t claim input tax on his meal and refreshments because it’s entertainment.
Now that you know about these common business travel expenses and their Vat consequences, let’s look at the steps I was talking about to ensure you never overlook valid deductions…

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To ensure to ensure you never overlook valid deductions, follow these three steps when dealing with business travel expenses

Step 1: Make sure the employee meets the criteria
By now you know that everything that involves SARS comes with conditions.
The condition is that you, your company director, partner or your employee must have spent at least one night away from your usual residence and place of work for business purposes.
According to the Practical Vat Loose Leaf Service, if business travel meets this requirement, you can recoup any of your business travel costs through the input tax claim.
Step 2: Collect all Vat invoices and ensure they’re 100% correct
The most important link in the Vat chain is your tax invoice. If it’s incorrect or incomplete in any way your input claim will collapse. Always insist on valid tax invoices.
Step 3: Work through the invoices and claims
Once you’ve checked that:
  • Your (company director or partner) employee was away from his place of residence and business for at least one night on a business trip;
  • He’s given you invoices for all travel expenses;
  • These invoices are valid and will support any input tax deduction, then
  • You can consider the various claims and determine what you can and can’t claim.
The reality is business travel expenses add to the costs of doing business.
So be tax-smart and follow these three steps to ensure you never overlook valid deductions.
PS. Here are 34 Input tax savings you could be missing out on…

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