Business.co.za
SolvedTax ServicesCape Town

How strict is SARS in Cape Town on home office and studio claims for chartered accountant (sa) directors?

I run a chartered accountant (sa) (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?

Sipho Ndlovu◆ 78asked 28 Sept

5 answers

  1. ✓ Accepted by the asker

    Thulani Dlamini◆ 103Trusted voiceon Tax Services28 Sept
    @sipho_ndlovu 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. Kagiso Molefe◆ 68Trusted voiceon Digital Marketing28 Sept
    Agree with @thulani_dlamini. 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. Mandla Nkosi◆ 53Trusted voiceon Tax Services28 Sept
    What @thulani_dlamini and @kagiso_molefe 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. Tshepo Mabaso◆ 115Trusted voiceon Consulting28 Sept
    @thulani_dlamini and @sipho_ndlovu we implemented this exact setup in Cape Town last quarter and it cut our monthly admin and reconciliation time in half.
  5. Sipho Ndlovu◆ 78Trusted voiceon Digital Marketing28 Sept
    Thanks @thulani_dlamini and @kagiso_molefe, 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.

Your answer