This month’s post looks at tax considerations for health practitioners in smaller healthcare practices. For example, you may be renting a room at a medical practice.
In this case, there are various deductions that are allowed, however we cannot emphasise enough: If SARS comes knocking at your door questioning an expense, you need to ensure that you have sufficient documentation to prove the expense.
This documentation could be invoices, bills, or in some cases (such as medical aid expenditure) a statement of account. These should be kept for at least 5 years.
There is still no easier or better way to account for these expenses than with physical evidence.
What expenses can I deduct?
Let’s return to our scenario. You are renting a room at a medical practice, and naturally, you will incur expenses such as phone insurance, phone bills and internet. This will all be deductible to the extent that you can show that the expenses were used for the purposes of your trade, in order to produce income. In certain instances, a deduction in the form of an allowance can also be allowed for equipment such as a laptop or heart monitor.
Some expenses might involve more calculation, as you would have to apportion the cost if it’s not wholly attributable to office use. For example, if your personal cell phone also serves as the number of your consulting room – the cell phone’s monthly cost will have to be split between personal and business usage.
Fuel expenditure from your home to the office is not deductible. However, fuel expenditure from the office to see clients, or between clients, will be deductible. For this purpose, you need to keep records in a logbook as proof. If you need to, you can download a logbook from SARS.
In conclusion, it’s not as simple as just deducting expenses. It should be done with caution and evidence for every claim.
If you’re practicing from a home office have a look at Tax Tuesday: Tax deductions on your home office
See also: Tax Tuesday: Your tax check-list
Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts at AJM Tax share their tips and explanations on tax issues. Learn everything you need to know about tax, from deductions you never knew about to retirement savings and capital gains. The first Tuesday of every month is Tax Tuesday.