[Question] Petrol and Cellphone expenses

[Raene]

Hi there

Can someone please tell me if a member of a CC is allowed to put through his or her petrol (private car) and cellphone (used privately and for business) as a business expense? If so, are there any regulations or tax implications?

Regards
Raene

[Raene]

Can anyone refer me to an online resource that could provide the above information? It is rather urgent.

Regards
Raene

[Elijah]

Hi Raene

The answer to your question is a Yes and a No. This is what the Income Tax act Sec 11(a) says:

"You are entitled to deduct any expenditure or losses actually incurred in the production of Income for your business provided it is not of a Capital Nature."

The key phrase here is "in the production of income". Lets address petrol deductions first.

1. Petrol: It is advisable or rather mandatory to have a log book detailing the km travelled for business purposes and private. if you determine that business km is 60% of total travel, then deduct 60% of you petrol expenditure. [There are various electronic logbooks which make it much easier than the old manual logbook. Remember also that travel from your home to your business premises is not "business travel".
2. Cell-phone: the same principal applies: you need to sepearate private from business calls. so, your recourse would be an itemised bill, or in future you could consider getting a cell-phone contract on the business name, there are other otions, which would be your decision. But my advise would be to find a creative/simple way to seperate you personal from business expenditure.

[Raene]

Elijah, thank you - your advice is much appreciated.

[Elijah]

It's a pleasure

[Dave A]

or in future you could consider getting a cell-phone contract on the business name

Just to point out on this one that where the contract is in the business name, as long as over 50% of usage is for business purposes, the entire value can be claimed as a business expense.