Commission income

If you are a commission income earner, you may qualify to claim additional expenses than an ordinary salaried employee.   Commission income is reflected against source code 3606 on an IRP5 and must be more than 50% of your total remuneration received from your Employer.  

As a commission income earner, you will be able to deduct certain expenses, which typically includes:

  • Telephone costs
  • Internet costs
  • Travel costs
  • Stationery costs
  • Depreciation on asset (wear and tear)
  • Entertainment costs
  • Home office expenses (proportioned to the area used for business)
  • Accountancy fees

There is no doubt that the Covid-19 pandemic had an adverse effect on all Taxpayers.  There might be light at the end of the tunnel for those commissioner earners who normally meet the 50% requirement but have just fallen short of it during the 2021 year of assessment.  

If you have in the past met this requirement on an annual basis and this year as an exception have not, please enquire with your tax adviser regarding the possibility of claiming your normal business expenditure against the commission income received.    

The onus remains upon the Taxpayer to prove the legitimacy of these expenses claimed.  SARS may request that you provide them with copies of the invoices and receipts.  If you are claiming travel costs, you will need to provide SARS with a detailed logbook with details of business kilometres, fuel cost, maintenance cost, and insurance cost.  When it comes to entertainment costs, you will be required to provide SARS with a schedule of the entertainment expenses showing details for each claim, and it should include names of people, the purpose of the meeting and you will have to submit the relevant invoices and receipts when requested to do so. It is therefore important that all documentation in support of these business expenses are kept for five years.

Commission income earners may submit applications for a fixed percentage directive to SARS.  These directives determine what percentage PAYE their Employers should withhold on the remuneration paid to them.  As part of the application, you will be required to prepare and submit a detailed income and expenditure statement.  The statement should be based on the income earned in the latest year of assessment, and you will need to make upward and downward adjustments to cater for any increases and any anticipated expenses.

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