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Commission Earners who Earn More than 50%
- 25 July 2024
- Accounting
- Theo Burrows
Commission earners who earn more than 50% of their total remuneration as the commission can claim expenses incurred in the production of their income. This is like trade deductions allowed for sole proprietors. The total remuneration includes basic salary, medical aid contributions, group life premiums and any retirement fund contributions made by the employer.
Travel expenses can be claimed based on actual expenditure and not the deemed expenditure allowed by SARS for salaried individuals who receive a travel allowance. Typically, this includes depreciation, interest, maintenance, fuel, licence and insurance costs and a standard logbook that complies with SARS requirements should be kept substantiating the travel expenditure claim.
It is worth noting that if work is being done from home, the room containing the home office need not be regularly and exclusively used for work performance, but they must use the home office more than 50% of the time to perform their duties. Other expenses that are overlooked are accounting, legal, administration fees, entertainment; as well as sales and marketing fees paid.
In the instance where the commission drops below 50%, it does not mean that the deductions can't be claimed. It must be demonstrated to SARS that this is an anomaly due to prevailing circumstances.
Commission earners who receive more than 50% of their total remuneration as commission are fully eligible to claim expenses incurred in generating their income, which is like the trade deductions allowed for sole proprietors. It's important to note that total remuneration includes basic salary, medical aid contributions, group life premiums, and any retirement fund contributions made by the employer.
Furthermore, travel expenses can be claimed based on actual expenditure, not the deemed expenditure allowed by SARS for salaried individuals with a travel allowance. This encompasses depreciation, interest, maintenance, fuel, license, and insurance costs. To substantiate the travel expenditure claim, a standard logbook compliant with SARS requirements should be carefully maintained.
It's crucial to recognise that for individuals working from home, the home office need not be regularly and exclusively used for work, but it must be used for work purposes more than 50% of the time. Additionally, other overlooked expenses that are claimable include accounting, legal, administration fees, entertainment, and sales fees paid.
Finally, if the commission drops below 50%, it does not automatically preclude the possibility of claiming deductions. However, it must be demonstrated to SARS that this is an anomaly due to prevailing circumstances.