When Commission is 50% or more of earnings
Individuals who receive over or earn more than 50% of their total income from commissions are eligible to deduct expenses related to generating their income. This is akin to business expense deductions permitted for individual business owners. The complete compensation encompasses base pay, contributions towards medical aid, group life insurance premiums, and any contributions to the retirement fund made by the employer.
Travel costs can be reimbursed based on real spending, not the presumed spending permitted by SARS for salaried employees who get a travel stipend. Generally, this encompasses depreciation, interest, upkeep, fuel, licensing and insurance expenses, and a conventional logbook that meets SARS standards should be maintained to validate the travel expense claim.
It's important to highlight that when working from home, the room serving as the home office doesn't have to be consistently and solely utilized for work-related tasks. However, they must use the home office for more than half of their working hours to carry out their responsibilities. Other costs that are often neglected include accounting, legal, administrative charges, entertainment, along with fees for sales and marketing.
In the event that the commission falls under 50%, it doesn't imply that the deductions cannot be asserted. SARS needs to be shown that this is an irregularity caused by the current situation.
Individuals earning commissions, where over 50% of their total income is commission-based, are completely qualified to deduct expenses related to generating their income. This is similar to the trade deductions permitted for sole business owners. It's crucial to understand that total compensation encompasses base pay, contributions to health insurance, group life insurance premiums, and any contributions to retirement funds made by the employer.
Moreover, travel costs can be reimbursed based on real spending, not the presumed spending permitted by SARS for salaried employees with a travel stipend. This includes costs for depreciation, interest, upkeep, fuel, licensing, and insurance. To validate the claim for travel expenses, a standard logbook that meets SARS guidelines should be diligently kept.
It's important to understand that for those who work from home, the home office doesn't have to be used solely and consistently for work. However, it should be used for work-related activities more than half of the time. Furthermore, other disregarded costs that can be claimed encompass accounting, legal, administrative charges, entertainment, and sales fees incurred.
Ultimately, if the commission falls under 50%, it doesn't necessarily rule out the chance of claiming deductions. Nonetheless, it needs to be proven to SARS that this is an irregularity caused by existing conditions.
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