Training bonds and claiming it back from the tax man

[Happydays]

Hallo PPrune,

I was wondering how it works if you got a training bond for example 2 years and after a year you leave the company. Then you pay back your half of lets say R50 000.

Can you then claim back the R50 000 from the tax man due to the fact that its a working expense ?

The other question I would like to find out from you guys. If you pay for a conversion to a aircraft you need to fly for a company out of your own pocket, can you claim it back. I payed for a conversion to work for a company. ( I payed the company) and would like to know if its worth it to ask the company for proof so I can claim it back.

Any advice will be nice from the experts on pprune...

Thank you !

[Deanw]

While I'm no tax expert, I think you'll find SARS will deem these expenses to be of a capital nature and thus you cannot claim them as a deduction.

[Bealzebub]

I don't know what the tax rules are in the RSA, but in the Uk you cannot claim for expenses that put you in a position to do a job. The training bond is not an expense, it is a forfeiture that you agreed to for breach of contract, it is not a working expense.

If you pay for a conversion to another type in order to place you in a position to work for an employer that would not be allowed either. If the company had already employed you and then required you to change types at your own expense that might be allowed, but it would be very unusual. If a company sold you a type rating and then employed you on the basis of having that rating, you could not claim this as an expense for the reason that the rating simply put you in a position to be employed.

As I say, I do not know what the rules are in the RSA, but I would be very surprised if they were so generous.

[Q4NVS]

SARS will deem these expenses to be of a capital nature and thus you cannot claim them as a deduction.

There is your final answer...

:zzz:

[Kennytheking]

Hi guys,

Actually you can claim a training bond back from SARS. I have and there is a precedent for it. See tax board decision 197(I think of 2001).

I successully claimed back the settlement of my airlink training bond, along with all my legal fees.

I think it works on the fact that you are probably moving onto a better job that allows you to earn more. Furthermore, the loss of revenue to the state is neutral. The company would have claimed against their tax for the training. By claiming back, the state will lose the amount that you claim, however, the amount you pay back should be taxable in the airline's hands which should make up for what the state refunds you.

I doubt any money that you pay for training yourself would be tax deductible. I think the liability has to stem from an obligation where you can work it off.....ie it must say conversion training bond.

My tax return underwent an audit and they asked me for several bits of supporting documents, but nothing to do with the training bond.

Hope it helps.

Kenny

[james ozzie]

While an expense of a capital nature cannot be deducted against income, can it not be offset against CGT of a house sale /share sale in the same tax year, if you happen to have? (Also no tax expert but just wondering...)

[Kennytheking]

james,

Interesting concept......I am no expert either, but I think you may have a valid point.

It would not even have to be in the same year, as a capital loss can be carried forward to future years. Just speculation on my part though!

[divinehover]

Get hold of Pieter Van der Zwaard, an accountant in Pta. He got my tax for a training bond back a few years ago. 012 662 0714

[Happydays]

thanks for all the info guys !