Please help: Tax for an independent contractor

[seneca_the_younger]

Good afternoon everyone, I hope that you are doing ok under the circumstances.

Could someone please help me out, I'm trying to work out what I can or cannot write-off for tax purposes, specifically the use of my car.

Here are the details:

1. I work three days a week for a company
2. I commute the above three days to the company and back
3. I bought a car to do this commute to and from work. The expenses are R1800pm car payment, R600pm insurance, R3300 in petrol (it's 90km from where I live), and R1300 in tolls (N2 highway - I'm going to apply for the 50% frequent user discount.)
4. So all in car and commute expenses come to ~R5000 a month.
5. I have a gross income of R20,000.00
6. Tax so far I have worked out is 25% for independent contractors so that's R5k a month. Please correct if that's wrong

How much of my car and commute costs can I write off as expenses? I use the car for 95% work only.

I would really appreciate your help. I'm trying to make my salary work for me so that I can save as much money as possible. Times like these have reminded me how important it is to save and have an emergency fund. For what it's worth, I have read through a few SARS documents but it's incredibly jargon heavy and am afraid that I might make a mistake.

Thank you for the help

 

[Willie Trombone]

Good afternoon everyone, I hope that you are doing ok under the circumstances.

Could someone please help me out, I'm trying to work out what I can or cannot write-off for tax purposes, specifically the use of my car.

Here are the details:

1. I work three days a week for a company
2. I commute the above three days to the company and back
3. I bought a car to do this commute to and from work. The expenses are R1800pm car payment, R600pm insurance, R3300 in petrol (it's 90km from where I live), and R1300 in tolls (N2 highway - I'm going to apply for the 50% frequent user discount.)
4. So all in car and commute expenses come to ~R5000 a month.
5. I have a gross income of R20,000.00
6. Tax so far I have worked out is 25% for independent contractors so that's R5k a month. Please correct if that's wrong

How much of my car and commute costs can I write off as expenses? I use the car for 95% work only.

I would really appreciate your help. I'm trying to make my salary work for me so that I can save as much money as possible. Times like these have reminded me how important it is to save and have an emergency fund. For what it's worth, I have read through a few SARS documents but it's incredibly jargon heavy and am afraid that I might make a mistake.

Thank you for the help

Keep a log book of your travel. Work out the percentage of travel for business and claim that percentage of all vehicle expenses including fuel, maintenance, toll fees etc.

 

[Pho3nix]

Get a tax consultant, from what I remember if you don’t work for more than one client, you can’t write anything off.

 

[Willie Trombone]

Get a tax consultant, from what I remember if you don’t work for more than one client, you can’t write anything off.

I'm pretty sure you can, but agree about seeing a tax practitioner

 

[Snyper564]

Read this,

https://www.sars.gov.za › NotesPDF
Web results
Employees Tax Independent Contractors - Sars


Unfortunately I don't think it's promising that you would be able to deduct it

If you did this for multiple clients it's a different story but Sars might see this as a normal employee employer relationship and therefore under section 23(m) the deduction wouldn't be allowed

 

[Willie Trombone]

Read this,

https://www.sars.gov.za › NotesPDF
Web results
Employees Tax Independent Contractors - Sars


Unfortunately I don't think it's promising that you would be able to deduct it

If you did this wmfir multiple clients it's a different story but Sars might see this as a normal employee employer relationship and therefore under section 23(m) the deduction wouldn't be allowed

Pretty sure you can claim all expenses incurred in conducting business. Independent contractor is a sole proprietor.

 

[Snyper564]

Pretty sure you can claim all expenses incurred in conducting business. Independent contractor is a sole proprietor.

Yes BUT read this

https://www.sars.gov.za/AllDocs/LegalDoclib/Notes/LAPD-IntR-IN-2012-17%20-%20Employees%20Tax%20Independent%20Contractors.pdf

The relationship might not be seen as an "independent contractor"

What happened in the past cant remember the date is that people "left" the company to be hired back as an independent contractor in order to claim all these expenses SARS put a stop to that so thats why im saying check this. I work with tax not employees tax havent touched on this since I left university years ago.

 

[Snyper564]

Here read this it touched on what you need to know

Independent contractors versus employees - The SA Institute of Tax Professionals

 

[Willie Trombone]

Yes BUT read this

https://www.sars.gov.za/AllDocs/LegalDoclib/Notes/LAPD-IntR-IN-2012-17%20-%20Employees%20Tax%20Independent%20Contractors.pdf

The relationship might not be seen as an "independent contractor"

What happened in the past cant remember the date is that people "left" the company to be hired back as an independent contractor in order to claim all these expenses SARS put a stop to that so thats why im saying check this. I work with tax not employees tax havent touched on this since I left university years ago.

Good point. It would depend on the relationship then I guess.

 

[Snyper564]

Good point. It would depend on the relationship then I guess.

Exactly, my concern of the facts that OP stated are the fact that the company is the only client and he works at their premises I dont think there is much of a chance you can claim this without looking into it in more detail. Would be best to reach out to a tax consultant on this not worth the penalties etc.

To OP for those of us who are salaried employees even buying a car paying petrol to get us to work etc cannot be claimed so you in the same boat as us if this is indeed the case.

 

[seneca_the_younger]

@Snyper564 @Daruk @Pho3nix Thank you for the advice everyone. I have read through the SARS document as posted and I think this comes down to the fact that I'm not actually an independent contractor. I'm going to ask my employer to pay tax on my behalf and and not worry about tax write-offs.

For anyone who is wondering, I'm not an independent contractor because 1. I do more than 50% of the work on premises, 2. I get paid on the same date and for the same amount, 3. I only work for one client.

I work as a candidate architect and in this current climate companies are scared to take on the risk of a new employee. I suggested becoming an independent contractor with the hope that I would get the job. I think it's best to renegotiate. Tough times.

 

[Snyper564]

@Snyper564 @Daruk @Pho3nix Thank you for the advice everyone. I have read through the SARS document as posted and I think this comes down to the fact that I'm not actually an independent contractor. I'm going to ask my employer to pay tax on my behalf and and not worry about tax write-offs.

For anyone who is wondering, I'm not an independent contractor because 1. I do more than 50% of the work on premises, 2. I get paid on the same date and for the same amount, 3. I only work for one client.

I work as a candidate architect and in this current climate companies are scared to take on the risk of a new employee. I suggested becoming an independent contractor with the hope that I would get the job. I think it's best to renegotiate. Tough times.

All the best man, hope you come right these are tough time indeed!