You can offset the business expenses incurred in the course of running the business against your company’s taxable income.

However, not all business expenses are tax deductible. So it is important that yourself or the person who is in charge of preparing the company’s tax returns be informed of what expenses are eligible.

Expenses who are eligible for tax deductions must fulfil all the 4 conditions listed below:

  1. Expenses that are generated in the process of producing the income
  2. The expenses must have already been incurred.
  3. Expenses are revenue and not capital in nature.
  4. Expenses are not prohibited from deduction under the Income Tax Act

Personal expenses such as entertainment which are not related to the business and expenses used for purchase of fixed assets are generally non-deductible for tax purposes. 

 

Below is a list of examples of what constitute a deductible or non-deductible expense.

Deductible Expenses:

  • Accounting fee
  • Administrative expenses
  • Advertisement
  • Auditor’s remuneration
  • Bad debts (trade debtors)
  • Bank charges
  • Commissions
  • Salary
  • Director’s fees
  • Exhibition expenses
  • Office expenses
  • Printing and stationery
  • Property tax
  • Rental of business premise
  • Registration of patents and trademarks
  • Secretarial fees
  • Telephone and internet bills
  • Transportation
  • Utilities

Non-Deductible Expenses

  • Amortisation
  • Bad debts (non-trade debtors)
  • Personal car expenses
  • Depreciation
  • Fines
  • Fixed assets
  • Goodwill payment
  • Renovation or refurbishment works

This list is by no means exhaustive but rather to give you a general idea of what expenses are eligible for tax deductions.

For more information or if you require assistance in your corporate tax filing, please do not hesitate to get in touch with us!