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How strict is SARS in Cape Town on home office and studio claims for courier, freight directors?

I run a courier, freight (Pty) Ltd from a dedicated office in Cape Town. Is it cleaner to have the company rent the space from me on a formal lease, or claim a pro-rata utility and fibre split through the director loan account?

Ari Goldman◆ 103asked 03 Sept

5 answers

  1. ✓ Accepted by the asker

    Michelle Wessels◆ 103Trusted voiceon Web Design03 Sept
    @ari_goldman_sa for a (Pty) Ltd in Cape Town, a formal market-related rental agreement between you and the company is usually cleaner, provided you declare the rental income on your personal ITR12 and offset proportional municipal rates, electricity and bond interest against it.
  2. caitlin_r◆ 83Trusted voiceon Web Design03 Sept
    Agree with @michelle_wessels. Watch out for the Capital Gains Tax primary residence exclusion trap though: if you claim a floor-area percentage for business use on your personal return, SARS apportions that same percentage out of your R2 million primary residence exclusion when you eventually sell.
  3. Annelize◆ 68Trusted voiceon Web Design03 Sept
    What @michelle_wessels and @caitlin_rossouw said is spot on. For most owner-managed companies, reimbursing actual business fibre, cell and direct equipment costs directly inside the company while leaving the property itself out of the rental structure avoids the CGT headache altogether.
  4. Bronwyn◆ 48Contributoron Web Design03 Sept
    @michelle_wessels and @ari_goldman_sa we implemented this exact setup in Cape Town last quarter and it cut our monthly admin and reconciliation time in half.
  5. Ari Goldman◆ 103Trusted voiceon Web Design03 Sept
    Thanks @michelle_wessels and @caitlin_rossouw, I had not considered the CGT primary residence impact on sale. Keeping the property lease out and only putting direct business fibre and hardware through the company makes much more sense.

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