However, such costs must be reasonable, and normally include the physical costs of relocating yourself, your family, and your personal goods and effects, as well as costs incurred as a direct consequence of relocating (such as costs of selling your old house, purchase costs on the new house, re-registration of vehicles, electricity and telephone connection fees, etc.).
INDEPENDENT CONTRACTOR EXPENSES LISTS CODE
This means that if you are in fact an independent contractor, you must go back to your client and get them to cancel the IRP5 and issue a fresh one indicating the income under code 3616.Īs far as the relocation costs are concerned, if you can prove to Sars' satisfaction that such relocation costs were in fact incurred in the production of income, there is no reason why you should not be able to claim these costs as a deduction. The reason for this is that if the gross income is shown under 3601, the independent contractor will not be able to claim any expenses, because income shown under this code is regarded as salary. However, what is critical is that the gross income paid to the independent contractor must be disclosed under code 3616 (independent contractors), and not 3601 (income - taxable). If employees' tax is in fact deducted, then it is mandatory for the contractor to be issued with an IRP5 certificate at the end of the tax year.
The fact that the rules have been changed to allow a client to rely on an affidavit in good faith seems to have done little to change matters significantly, and many independent contractors still face the prospect of having PAYE deducted from payments for work performed. This is because the client itself (and possibly its directors as well) becomes liable for the tax if they fail to deduct tax under circumstances where such deduction is in fact required. Unfortunately for many such independent contractors, clients tend to err on the side of caution when it comes to the requirement to deduct employees' tax. In other words, there must be no elements to the relationship that bears the signs of being one of employer / employee. Additional requirements include not being a member of any benefit fund run by one of your clients, and not being subjected to direct control concerning the manner in which work is performed.
I assume I can claim the costs of travelling to Gauteng for work purposes?Īnswer: As you have pointed out, the characteristics of an "independent contractor" include having multiple clients, as well as being required to use your own equipment, telephones, and vehicles. What expenses can I claim if I use a home office at the home I rent? Can I claim the relocation expenses paid by myself?
Can I claim expenses earned in the production of income (motor expenses, cell phone, computer, etc) on the IRP5's where the income code only indicates amounts received under 3601?