Load shedding is a reality but can SARS help with the pain?
While we are all getting a handle on working around load shedding schedules, filling up the generators and navigating traffic, it is a good time to also reflect on the impact this has on your dealings with SARS.
There is unfortunately no claim you can submit on your tax return for the loss of income and frustration experienced due to ESKOM troubles. However, there may be a little bit of good news. It is possible to obtain a small tax benefit on the additional cost you need to incur. Fuel, batteries, generators, solar panels, etc. are all cost that can be deemed to assist you in running your business. Such cost is tax deductible. Unfortunately, you can only get the cash flow tax benefit and this will not place you in a cash neutral position. To get any benefit you need to make a profit first.
Companies that is heavily reliant on electricity may find that it is not cost effective to provide their own electricity. Other businesses who is self-sufficient with basic electricity back up, may still find that load shedding has a negative impact on their operations. Just think of the shopping malls without backup power. Customers avoid them even if some of the stores inside may be trading.
Even if business may put in place backup plans and get some relief on their taxes, there is no assistance to normal households. Since your private residence is not a business, the additional cost incurred does not get subsidised by SARS. This is similar to the monthly cost you incur for private security, private schools, etc. The argument that this should be covered by your taxes and that if you pay it yourself you should receive a tax benefit on your annual tax return is a political argument and there is no benefit in terms of the current Tax Acts. If you decide to upgrade your private residence with backup solar, batteries and generators, it may be possible that you can get some tax relief on the profit one day when you sell your property. This will be in the form of reduced capital gains tax, but you need to keep sufficient documentary proof for SARS.
Tax benefit if property is rented to tenants.
If you rent your property, your landlord is engaging in a business, and his costs is tax deductible from the rent you pay him on a monthly basis. Any cost that the landlord incurs in providing backup power may therefore tax deductible. This may be an argument that you can use in convincing the landlord of your residence to provide backup power. It is important that the landlord disclose these costs correctly in their tax return and also have sufficient proof of cost incurred for the possible SARS audit.
Lastly do remember that even if load shedding is a reality and may be the cause of late payments to SARS, SARS will impose a 10% penalty. Even if they are sympathetic to the cause it may take a lot of effort to convince somebody senior enough at SARS that such a penalty incurred should be reversed. Taxpayers should plan carefully to avoid additional frustration in dealing with SARS.
If you need any assistance with the issues mentioned above, please don’t hesitate to contact us: email@example.com
Remember, no SARS problem too big or small, we’ve got this!