Tax Deductions for South African Freelancers: Complete Guide

As a freelancer in South Africa, you can significantly reduce your tax bill by claiming legitimate business expenses. This guide covers all the deductions you're entitled to claim.

The Golden Rule

An expense is tax-deductible if it was incurred:

• In the production of income (related to earning your freelance income)
• Not of a capital nature (consumable, not a long-term asset)

Keep receipts and records for everything you claim!

Home Office Deduction

If you work from home, you can claim a portion of your household expenses.

Requirements

To claim home office expenses, you must:

1. Have a dedicated workspace used regularly and exclusively for work
2. Derive more than 50% of your income from working at home
3. Not be a salaried employee (or your employer must not provide an office)

What You Can Claim

Calculating Floor Space Percentage

Example: Your office is 15m² and your home is 100m²

• Floor space percentage: 15% (15 ÷ 100)
• If rent is R10,000/month: R10,000 × 15% = R1,500 deductible

Important Notes

• The room must be exclusively used for work
• Keep detailed records and measurements
• Consider taking photos of your workspace

Equipment and Technology

Computers and Electronics

• Full cost deductible if under R7,000
• For items over R7,000, claim depreciation over 3 years (33.3% per year)
• Includes laptops, monitors, printers, tablets

Software Subscriptions

Fully deductible in the year of expense:

• Adobe Creative Cloud
• Microsoft 365
• Accounting software
• Project management tools
• Cloud storage

Depreciation Example

R15,000 laptop purchased:

• Year 1: R5,000 (33.3%)
• Year 2: R5,000 (33.3%)
• Year 3: R5,000 (33.3%)

Professional Services

Fully Deductible

• Accountant fees
• Tax practitioner fees
• Legal fees (for business matters)
• Business consulting
• Bookkeeping services

Communication Expenses

Phone and Data

• Personal phone with business use: claim the business percentage
• Dedicated business line: 100% deductible
• Mobile data for work: business percentage

Internet

• If exclusively for work: 100% deductible
• If shared personal/business: reasonable business percentage (typically 50-80%)

Travel Expenses

Business Vehicle Use

Two methods available:

Method 1: Actual Costs

• Fuel, maintenance, insurance, license fees
• Multiply total by business use percentage
• Keep a detailed logbook

Method 2: Simplified Rate

• Use SARS prescribed rate per kilometer
• R4.76 per km (effective 1 March 2025)
• Requires a logbook of business trips

What Constitutes Business Travel

• Meeting clients
• Going to co-working spaces
• Attending industry events
• NOT: commuting to a regular office

Local Business Travel

• Uber/taxi to client meetings
• Parking at client sites
• Tolls on business trips

International Travel

• Airfare for business trips
• Accommodation (reasonable)
• Meals while traveling (reasonable)
• Keep all receipts!

Education and Training

Deductible

• Courses related to your current work
• Professional certifications
• Industry conferences
• Online learning platforms (Udemy, Coursera, LinkedIn Learning)
• Books related to your profession

NOT Deductible

• General education not related to your work
• Courses to change careers
• Personal development unrelated to business

Insurance

Deductible

• Professional indemnity insurance
• Public liability insurance
• Business contents insurance
• Key person insurance (if sole proprietor)

NOT Deductible

• Personal life insurance
• Personal medical aid (but see medical tax credits)
• Personal disability insurance

Marketing and Advertising

Fully Deductible

• Website hosting and domains
• Digital advertising (Google, Facebook)
• Business cards and branding
• Portfolio website costs
• Photography for business use
• Marketing materials

Bank and Payment Fees

Deductible

• Business bank account fees
• Payment gateway fees (PayFast, Yoco)
• Foreign exchange fees on business transactions
• Accounting software fees

Bad Debts

If a client doesn't pay and you've already declared the income:

• You can claim the bad debt as a deduction
• Must have taken reasonable steps to collect
• Must be genuinely irrecoverable

Retirement Contributions

Retirement Annuity (RA) Contributions

• Up to 27.5% of taxable income
• Maximum R350,000 per year
• One of the best tax-saving strategies!

Example

Taxable income: R500,000 Maximum RA contribution: R137,500 (27.5%) Tax saving at 31% bracket: ~R42,625

Medical Expenses

Section 6A Credits (2025/2026)

• Main member: R364/month credit
• Main member + first dependant: R728/month combined
• Additional dependants: R246/month each

Section 6B (if 65+ or disabled)

• 33.3% of qualifying expenses exceeding 3× your monthly credits

Common Mistakes to Avoid

1. Not keeping receipts - No receipt, no deduction
2. Claiming personal expenses - SARS can audit and impose penalties
3. Missing the apportionment - Home office and vehicle need calculations
4. Forgetting small expenses - They add up!
5. Not claiming depreciation - Spreads the benefit but don't forget

Record Keeping Tips

Keep for 5 Years:

• All receipts and invoices
• Bank statements
• Tax certificates (IT3, IRP5)
• Home office calculations
• Vehicle logbooks

Organize by Category:

• Create folders for each expense type
• Use accounting software or TaxTrack SA
• Back up digitally

How TaxTrack SA Helps

TaxTrack SA makes expense tracking easy:

• Categorize expenses automatically
• Track tax-deductible vs non-deductible
• Calculate home office percentage
• Generate expense reports
• Monitor your tax position year-round

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This guide is for informational purposes. Tax rules change - consult a tax professional for specific advice.