The weeks before 28 February can be the most expensive time of year for your business. Not because of what you’re paying SARS, but because of what you’re not claiming, what you’re claiming incorrectly, or what you’re timing wrong. A missing logbook entry, a forgotten Employment Tax Incentive claim, a capital gain recorded in the wrong tax year. These are all costly mistakes that can trigger penalties, forfeit deductions, or create unexpected tax bills.
The logbook mistake that costs R18,600
Your travel allowance is one of your biggest tax deductions, and it’s also where SARS catches the most mistakes. Without a compliant logbook, you lose the entire deduction. SARS Interpretation Note 14 couldn’t be clearer: no logbook means no travel deduction, regardless of how much legitimate business travel you actually did.
Most business owners think they’re keeping proper records. They note down “client meeting” in their diary, track mileage somewhat consistently, and figure that’s enough. It isn’t. SARS requires specific information for every single business trip. Recording “meeting” as your trip reason will result in your entire claim being disallowed.
You need the specific person you met, their company name, and contact details. So instead of “client meeting,” write “Presentation to procurement manager Mr Smith at ABC Manufacturing (Pty) Ltd, Sandton.” You must also record your vehicle’s opening odometer reading on 1 March and closing reading on 28 February. Missing either one eliminates your entire year’s worth of claims. For each trip, you need the date, exact kilometres, starting point, destination, and the detailed reason.
Here’s another common mistake
Your daily commute from home to your office is always personal travel. Only trips from your office to clients, between client sites, or directly from home to a client location count as business travel. The cost? If you receive a R60,000 annual travel allowance but don’t have a valid logbook, you’ll pay R18,600 in additional tax at the 31% marginal rate. SARS may also apply a 25% understatement penalty of R4,650, bringing your total to R23,250.
The fix is straightforward. Use the official SARS eLogbook from sars.gov.za. Record your opening and closing readings. For every business trip, immediately record detailed information, including people’s names and companies.
Missing R30,000 per employee through unclaimed Employment Tax Incentive
The Employment Tax Incentive represents the most significant cash flow benefit available when hiring young workers. Yet many businesses either don’t claim it or claim incorrectly, forfeiting between R18,000 and R30,000 per qualifying employee. From 1 April 2025, the rates increased substantially.
Maximum monthly ETI jumped from R1,000 to R1,500 during an employee’s first 12 months, and from R500 to R1,000 during months 13 to 24. To qualify, employees must be aged 18 to 29, hold a valid South African ID or asylum documentation, work at least 160 hours monthly, and earn between R2,500 and R7,499. They must receive at least the National Minimum Wage.
Common mistakes that forfeit the entire benefit include:
- not being tax compliant (any outstanding returns or tax debt over R100 eliminates eligibility),
- missing the reconciliation deadlines of 31 October (for the period 1 March to 31 August) and 1 May (for the period 1 March to 28/29 Feb) (unclaimed ETI is forfeited forever),
- and incorrect calculations for part-time workers
A small retail business with five qualifying employees earning R3,500 monthly saves R7,500 per month using the new rates from April 2025. That’s R90,000 annually or R150,000 over 24 months. This represents genuine cash flow improvement, hitting your bank account monthly. The claiming process requires you to complete your EMP201 by the 7th of each month, showing total PAYE and ETI separately. Submit EMP501 reconciliations twice yearly by 31 August and 30 April.
The R50,000 capital gains timing mistake
Capital gains tax catches many business owners off guard because they misunderstand when the tax is triggered. The rule is simple but counterintuitive: CGT is triggered when you sign the sale agreement, not when the transfer occurs. You sign a property sale agreement on 25 February 2025, with transfer scheduled for June. You assume the capital gain falls in 2025/26. Wrong.
The gain is taxable in 2024/25 and must be included in your second provisional tax estimate due 28 February 2025. Missing this triggers a 20% underestimation penalty plus 11% annual interest on the shortfall. For 2024/25, individuals pay tax on 40% of net capital gains, whilst companies pay on 80%.
Strategic planning can save substantial amounts. If you’re disposing of multiple assets, spread them across tax years to use multiple R40,000 annual exclusions for individuals. Selling three vehicles with R60,000 gain each? Sell two before 28 February and one after 1 March. This saves R2,560 to R5,760, depending on your marginal rate.
Capital loss harvesting also works
If you have a R200,000 property gain, dispose of loss-making equipment before 28 February. A R30,000 loss reduces your net gain, saving R4,800 in tax. The costs of getting timing wrong escalate quickly. A company sells property with a R2.5 million gain but doesn’t include it in provisional tax, believing the transfer date matters. At 80% inclusion and 27% corporate rate, the tax is R540,000. The underestimation penalty is R108,000 plus interest, totalling over R160,000, simply because of timing confusion.
The automatic R20,000 provisional tax penalty
Provisional tax deadlines are absolute, and a 10% late payment penalty and 20% underestimation penalty trigger even for one-day delays. The late payment penalty is brutal: 10% of the provisional tax not paid on time applies automatically. A company with R700,000 provisional tax due pays R70,000 in penalty for late payment. No discretion, no grace period. Even one day late triggers the full penalty.
The underestimation penalty varies by income.
For income of R1 million or less, your estimate must be at least 90% of actual income or equal to your basic amount, whichever is lower. The penalty is 20% of the shortfall. For income above R1 million, your estimate must be at least 80% of actual income. An individual with a R400,000 basic amount estimates R350,000 but earns R420,000. The required estimate is R378,000. The shortfall triggers a R3,468 penalty plus 11% interest.
The most common mistake?
- Not including capital gains in provisional tax estimates.
- If you signed a sale agreement this year, even if the transfer hasn’t occurred, that gain must be included in your 28 February estimate.
- Simple prevention means filing conservatively. Use the 90% safe harbour for income under R1 million.
- Use 80% for income above R1 million. Include capital gains. File and pay early.
- What to do before 28 February
- Start with your travel logbook.
- Verify it contains detailed trip reasons with names and companies. Check that you have opening and closing odometer readings.
- If you’ve been slack, you cannot fix it retroactively. A missing reading eliminates all claims.
- Confirm your EMP201 returns include accurate ETI claims for qualifying employees.
- If you’ve missed claiming ETI, you have until 28 February through reconciliation. After that, it’s forfeited forever.
- Calculate your provisional tax estimates, including any capital gains.
- This is the most common omission triggering penalties. If you signed a sale agreement this year, that gain must be included in your 28 February estimate.
- The penalty framework shows no mercy.
- Late payment penalties are 10%, underestimation penalties are 20%, and interest compounds at 11% per annum.
Yet every mistake is preventable.
Professional tax advice pays for itself many times over, but only if you seek it before year-end. The difference between a R50,000 tax bill and a R150,000 bill often comes down to a single logbook entry, one missed form, or a misunderstood deadline. The choice is yours, but it must be made before 28 February 2025.
