How strict is SARS in Cape Town on home office and studio claims for commercial directors?
I run a commercial (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?
◆ 103asked 01 SeptShown to 9 businesses that do this work5 answers
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01 Sept@thandiwe_ndaba 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.
01 SeptAgree with @pieter_vdm. 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.
01 SeptWhat @pieter_vdm and @jaco_pretorius 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.
01 Sept@pieter_vdm and @thandiwe_ndaba we implemented this exact setup in Cape Town last quarter and it cut our monthly admin and reconciliation time in half.- 01 SeptThanks @pieter_vdm and @jaco_pretorius, 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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