Hi Dave.
It's not an expense.
The drawing of money out of the business goes straight to the Balance Sheet as an Asset (Meaning the owner took out a loan). So typically you find balance sheet item called, "Loan to Mr. K. Koo R100 000 Debit".
As far as SARS is concerned, you can not use drawings to reduce tax, because the owner loans don't reduce profits as they never make it to the income statement.
What you can do, is try use the "refund" route. How it works is, you buy stock for your company and you issue an invoice to the business to pay you back for your petrol, your stock, and other expenses. The invoice with all other supporting documents does reduce tax and constitutes an expense. Also keep all slips of restaurants and meals, you can write them off as expenses saying you were in a client meeting.
So I think there is definitely something wrong with the logic of drawing out profits in a registered company. You can play that game in partnerships and sole props.
Did you like this article? Share it with your favourite social network.