How to Save on Tax in South Africa
The rising expense of living is nothing new, and it is only expected to increase. Food prices, gas prices, interest rates, and inflation are all working together to make life as expensive as possible in South Africa.
The stifling pressure of a recovering economy is drawing more and more South Africans to tax returns and tax incentives as a means of relief. If you understand how to correctly package your returns and organize your portfolio, there are ways and means to recover some of your tax contributions.
Tax-saving advice
utilizing retirement funds for the long term
You can plan for your retirement while also being tax-wise. You should be sure to contribute to a savings account each month.
The ability to deduct your investment in a retirement annuity from your taxable income is a major advantage, according to O’ Connell.
For instance, if your annual income is around R500,000, your effective tax rate is roughly 25%. In other words, for every R100 you invest in your retirement annuity, only R75 comes out of your pocket since, if you claim it back, you get R25 back from the taxman.
Allow your health insurance to make a tax contribution.
A medical scheme contribution tax credit was introduced by the South African Revenue Service (SARS) in 2012. Your contributions are subtracted from your overall tax liability, or the total amount of tax you owe.This rebate is known by SARS as the “Medical Schemes Fees Tax.” which is applicable to the costs incurred by a taxpayer for themselves and any dependents they may have under a recognized medical plan.
Giving is tax deductible.
Giving to others is undoubtedly a selfless act, but it doesn’t hurt to receive a small reward in return. You are permitted to give up to 10% of your taxable income to a charity, according to Section 18A of the Income Tax Act.
O’Connell advises making sure the Public Benefit Organization has a Section 18A certificate if you want to make a deduction claim.
Having an office at home
Though you worked from home once or more during the previous tax year, even if you are a permanent employee at the company,, you ought to be able to submit an expense claim. According to SARS, if you are an employee who works from home and have designated a room to be used for “trade,” you may be able to write off some of the costs associated with keeping a home office.
Conclusion
The stifling pressure of a recovering economy is drawing more South Africans to tax returns and tax incentives. The ability to deduct your investment in a retirement annuity from your taxable income is a major advantage. A medical scheme contribution tax credit was introduced by the South African Revenue Service in 2012. You are permitted to give up to 10% of your taxable income to a charity, according to Section 18A of the Income Tax Act. If you work from home, you may be able to write off some of the costs associated with keeping a home office.
