To track business expenses in South Africa, record every business-related purchase with the amount, date, category, and a receipt or invoice as supporting documentation. Expenses that relate to generating your business income can be deducted from your taxable income when you submit your tax return to SARS, reducing the amount of tax you pay.
Tracking expenses has two main benefits: it reduces your tax bill and it shows you where your money is going so you can make better business decisions.
Why expense tracking matters in South Africa
For SARS tax deductions: SARS allows businesses to deduct legitimate business expenses from their taxable income. If you earn R500,000 and have R100,000 in deductible business expenses, you pay income tax on R400,000, not R500,000. The tax saving depends on your tax rate.
For VAT input tax (if VAT registered): If you are a VAT vendor, you can claim back the VAT component of business expenses. On a R10,000 expense including 15% VAT, the VAT component is approximately R1,304. You reclaim this from SARS.
For business decisions: Knowing that your software subscriptions cost R3,000/month and your marketing costs R8,000/month helps you assess whether each is worth the spend.
What business expenses are tax deductible in South Africa?
SARS allows deductions for expenses that are “actually incurred in the production of income” and are not of a capital nature. Common deductible expenses for freelancers and small businesses include:
- Office rent or home office deduction (if you have a dedicated home office)
- Business vehicle costs (fuel, maintenance, insurance, for the business use portion)
- Equipment and tools used in your business
- Software subscriptions (accounting, design, productivity tools)
- Internet and phone costs (the business use portion)
- Professional fees (accountant, lawyer, bookkeeper)
- Marketing and advertising costs
- Business insurance
- Travel expenses for business purposes
- Training and professional development directly related to your work
Capital expenses (such as purchasing equipment) are treated differently and may qualify for depreciation deductions over time rather than a full deduction in the year of purchase.
This is not tax advice. Consult a registered tax practitioner for your specific situation.
How to categorise your expenses
Using consistent categories makes it easy to total each type of expense at tax time:
| Category | Examples |
|---|---|
| Office and administration | Stationery, printing, postage |
| Software and subscriptions | Rebill, design tools, productivity apps |
| Professional services | Accountant, bookkeeper, attorney |
| Marketing | Social media ads, website costs, branding |
| Travel | Fuel, parking, flights for business trips |
| Communication | Phone, internet (business portion) |
| Equipment | Laptop, camera, tools (capital items may be depreciated) |
| Insurance | Business insurance, professional indemnity |
| Training | Courses, books, professional memberships |
| Vehicle | Running costs for business vehicle use |
What records must you keep for SARS?
SARS requires you to keep records of all transactions for at least 5 years. For expenses, this means:
- Tax invoices or receipts for every expense you want to deduct
- Bank statements showing the expense was paid
- A record of the business purpose for expenses that could be personal (such as a meal or travel)
Without a receipt or tax invoice, SARS can disallow the deduction.
Quick answer
How do you track business expenses in South Africa for tax purposes?
To track business expenses in South Africa for SARS tax deductions, record each business expense with the date, amount, category, and a reference to your receipt or tax invoice as proof. Common deductible expenses include office costs, software subscriptions, professional fees, marketing, business travel, and phone or internet costs. SARS allows you to deduct these from your taxable income, reducing the tax you owe. If you are VAT registered, you can also claim back the VAT portion (15%) on qualifying expenses. Keep all receipts and records for at least 5 years as SARS can request them in an audit. Rebill’s expense tracking feature lets you log expenses with categories, descriptions, and supplier details, so all your records are in one place alongside your invoices and revenue data.
The simplest ways to track expenses
Rebill’s expense tracking: Rebill includes built-in expense tracking on the Premium plan. Log expenses with categories and descriptions, and view your expenses alongside your income and invoices in one dashboard. This is the easiest option if you are already using Rebill for invoicing.
Spreadsheet: A simple Google Sheets or Excel spreadsheet with columns for date, description, category, amount excluding VAT, VAT amount, and total is perfectly adequate for a small business with a manageable number of transactions.
Accounting software: If you use Sage or Xero for invoicing, they also include expense tracking. These are better suited to businesses that need full accounting alongside expense management.
Bank statement categorisation: Many South African banks (Standard Bank, FNB, Nedbank, Capitec) offer expense categorisation in their business banking apps. This is not detailed enough for tax deductions but can give you a quick overview.
The key is consistency. Whatever method you choose, update it regularly (weekly is better than monthly) so receipts do not pile up.
Frequently asked questions
Can I deduct home office expenses in South Africa?
Yes, provided you have a dedicated area of your home used exclusively for business. You can deduct the proportion of your home expenses (rent, rates, electricity, internet) that corresponds to the percentage of your home used as an office. For example, if your office is 10% of your home's floor area, you can deduct 10% of qualifying home costs. SARS is strict about the 'exclusively for business' requirement, so the space must not double as a guest room or TV room.
Do I need to keep physical receipts for SARS?
SARS accepts digital records, including scanned or photographed receipts. You do not need to keep paper originals as long as the digital copy is clear, legible, and includes the supplier's name, VAT number, date, amount, and description. Keep your receipts stored separately (email, cloud storage, or a folder on your phone) and log the corresponding expense in your tracking tool with a clear description so records are easy to match.
Can I deduct the cost of invoicing software as a business expense?
Yes. Software subscriptions used in the running of your business, including invoicing, accounting, or project management software, are deductible business expenses. If you pay R99/month for Rebill Premium, that is R1,188 per year you can deduct from your taxable income. If you are VAT registered, you can also claim the R178.20 VAT included in the annual cost.
What is the difference between an expense and a capital expenditure?
An expense (also called a revenue expense) is a recurring cost of running the business, like monthly software subscriptions, rent, or phone bills. Capital expenditure is a purchase of a long-term asset, such as a laptop, camera, or office furniture. Expenses are typically fully deductible in the year they are incurred. Capital expenditure may need to be depreciated over the useful life of the asset, with a portion deducted each year. The distinction matters for your tax return.