Charge my own business rent for home use?

JPDEL

New Member
Joined
Jul 16, 2019
Messages
3
So I know you can reduce your personal tax by deducting expenses incurred while working from home (based on percentage of square meterage used), however, can you do it another way and just charge your own business rent every month? Obviously you'd have to declare the rental income in your personal tax return, which would increase your tax output, but you'd be able to charge a more realistic amount if say your office space is small, but the expenses consumed is actually much higher than the deduction percentage of the property. ie. the office space makes up 15% of your property but actually consumes 30% or more of the property's monthly costs (electricity, internet, etc.).

I tried to research this but didn't come up with anything. I'm not sure if SARS would "frown" upon such a setup, or even outright considers it some form of tax evasion or something. Ultimately the business ends up incurring a real cost (so they pay less tax), but you personally will get a new income source (and so will be taxed more), so in theory it breaks even (unless I'm missing something).
 

Brute

Member
Joined
Aug 22, 2012
Messages
24
yes as you stated the rent is income to you as the landlord while its an expense to the business. the business is generally taxed at 28% while the marginal tax rate for a natural person depends on your income bracket and other things, so we cannot say there is a breakeven but remember the tax for the business is seperate and yours as an individual seperate. Sars shouldnt have issues with such setup as long as you have proof of the expenses incurred
 

JPDEL

New Member
Joined
Jul 16, 2019
Messages
3
yes as you stated the rent is income to you as the landlord while its an expense to the business. the business is generally taxed at 28% while the marginal tax rate for a natural person depends on your income bracket and other things, so we cannot say there is a breakeven but remember the tax for the business is seperate and yours as an individual seperate. Sars shouldnt have issues with such setup as long as you have proof of the expenses incurred
Great, thanks for the feedback. Will investigate the final tax payable as an individual to see if it's worthwhile.
 
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