Commission earners and deductions

  • How do taxpayers qualify?
    • Remuneration of taxpayer is made up of >50% commission or some other variable income based on work performance
  • What can be deducted against remuneration?
    • All as a % of business vs personal use
      • Telephone
      • Stationery
    • Personal assets used for business purposes
      • Depreciation
      • Repairs
    • Entertainment expenses specifically relating to clients
    • Vehicle expenses as a % of business kms as per logbook vs total kms travelled for the year of assessment (no travel allowance)
      • Business kilometres include:
        • Home to client
        • Client to office
        • Office to client
        • Client to client
        • Client to home
      • Personal kilometres include:
        • Home to office
        • Office to home
      • Fuel
      • Repairs and maintenance
      • Interest on vehicle instalments
      • Insurance
    • Home office expenses
      • Who qualifies?
        • Taxpayers whose remuneration is >50% commission or some other variable income based on work performance
        • Taxpayers whose remuneration is <50% commission or some other variable income ie normal salaried employee
      • How do taxpayers qualify?
        • Must be a separately identifiable space used exclusively as an office for trade
        • Must be specifically equipped with office instruments/tools such as a computer and printer in order to perform work (working on your lap in the lounge or at your dining-room table does not qualify)
        • Your employer allows you to work from home
        • More than 50% of your total working hours are from your home office
        • If you do not meet the criteria above you do not qualify to deduct home office expenses
      • How are the expenses calculated?
        • Expenses claimed a % of size of office in relation to the rest of the house in square meterage
          • If office is 10sq and the entire under roof of the house is 100sq then 10% of home expenses can be deducted.
        • Which home office expenses qualify for deduction?
          • Rent
          • Interest on bond
          • Repairs and maintenance
          • Wages
          • Rates
          • Electricity, water, refuse and sewerage

For more information, contact ERH Accountants.