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Tax tips
Maximise your Tax Incentives
Contribute to a Retirement Annuity (RA)
By investing in a RA, taxpayers can reduce their taxable income by up to 27.5% of their annual income or taxable earnings, whichever is lower. This not only provides a tax benefit but also ensures one’s future retirement income.
Claim Medical Tax Credits
South African taxpayers can benefit from medical tax credits by claiming expenses for medical bills and services such as consulting a doctor, specialist, dentist, or physical therapist. The qualifying fees for medical expenses per beneficiary is capped and reviewed annually.
Make use of Capital Gains Tax (CGT) Exclusion
When selling assets, taxpayers can use the annual CGT exclusion to reduce the amount of tax payable. In the current tax year, the first R40,000 of capital gains are tax-free. Any gains above this threshold are taxed at a rate based on the taxpayer’s annual income.
Maximise Donations to Charities and Non-Profit Organisations
South African taxpayers can deduct donations made to registered Public Benefit Organisations (PBO’s) from their taxable income. A donor can claim up to 10% of taxable income donated as tax-deductible, particularly a great way for taxpayers to potentially reduce their tax liability while supporting a good cause.
Take advantage of tax deductible contributions
In South Africa, taxpayers can make tax deductible contributions to registered pension funds, retirement annuities and donation to charitable organizations. These contributions can significantly reduce a taxpayer’s taxable income which can result in lower tax liabilities or even a tax refund. It’s important to keep records of all such contributions made throughout the year to claim the full deduction at tax time.
Claim all eligible tax credits
South Africa offers tax credits for taxpayers who are also parents, have medical aid and pay for tuition fees. Taxpayers can claim tax credits for dependent children, a rebate for medical schemes contributions and a deduction of up to R15,000 for tuition fees paid during the tax year. It’s important to fully understand which tax credits one is eligible for and ensure all eligible credits are claimed to maximise the tax benefits.