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03 May 2004 – Removal of the Entertainment Allowance by SARS
How can you still benefit from an entertainment allowance?

The formal Entertainment Allowance, as we knew it over the past number of years, does not exist anymore and can not be used as a deduction against your taxable income.

You may then ask how can I still benefit? The answer is very simple. To utilize the Entertainment Allowance, one needs to talk to your employer to restructure your salary package NOT to include any entertainment allowance, and not to add it to the cash component of your salary either.

The South African Revenue Service does allow the deduction of entertainment expenses, only as a tax deductible business expense. SARS does allow employee entertainment expenses to be deducted by a business on a reimbursement basis. This means that you can incur entertainment expenses and claim it from your employer, who can refund you and then can claim it as a tax deduction.

You can reach an agreement with your employer on the amount what you can claim per month or the total amount for the year. Also what type of entertainment expenses you can claim and what you can’t claim.

Don’t cut your nose to spoil your face, by trying to claim everything from your daily milk and bread to your monthly booze bill. Play it safe and only claim your genuine entertainment expenses, like your monthly date with your partner for a dinner for two by candle light to your annual Christmas Party for your clients.