The Income Tax act does not allow the deduction of expenses, apart from some minor exceptions, from a salary. However it does allow deductions from commission earned, provided those deductions qualify in terms of the usual rules, such as "in the production of income" and others. So a tax incentive exists to earn commission rather than a salary.

For this reason SARS is very strict on the definition of commission and makes it clear that this income must be directly related to “his or her sales or the turnover attributable to him or her”. However, if this applies and a person derives income “mainly” in the form of commission, expenses can be allowed as deductions against that income. Here the word “mainly” is deemed to be 50% or more of total income. If the commission income comes in below this figure (i.e. less than 50%), all expenses will be disallowed. A very harsh result if you have expenses to claim, when a fairer option may have been to allow an apportionment of expenses at least.

Therefore the lesson learnt is as follows:

If you are in a position to earn commission income as part of your package, make sure that the commission amounts to more than 50% of you total income for the year.