By Jessie Taylor
More than R1.4-billion is collected by the South African Revenue Service (SARS) every year, and of that almost 40% is paid by individuals under their personal income tax.
But there are several deductions that individual taxpayers can apply for, which could reduce the amount of tax they owe or help them recoup some of the expenses incurred during the tax year.
The tax season has officially opened, and while the details around tax payments can be daunting for many, failing to claim deductions that apply to you could see you losing money.
Here are some of the tax deductions you can claim when completing your return this year:
If you pay into a pension, provident or retirement annuity fund, you are eligible for a tax deduction of up to 27.5% of your annual income. This is limited to a maximum of the amount contributed and the deduction is capped at R 350 000 per year.
If you’re putting away retirement savings, the amount is deducted from your salary before tax, lowering the amount of remuneration taxed by SARS.
Your savings is most likely done through your employer and should be reflected on your IRP5 form. However, if you have additional contributions or pay into a retirement annuity, ensure that you are lodging the paperwork (including your proof of contributions and contributions certificate) with SARS.
If your employer supplies you with a car for work travel, you can claim back for the kilometres you travelled for business purposes during the year. However, to claim these expenses you need to keep an accurate and detailed logbook of all business-related travel and maintenance expenses. You can claim for expenses such as petrol, oil, service costs and insurance.
If you travel for work (beyond your commute to and from the office) and are not reimbursed by your company, you can claim these travel expenses from SARS. You will need to prove that the mileage was directly related to earning your income, such as travelling to client meetings. You’ll need to have an accurate and detailed logbook of your travel, as well as any maintenance expenses.
If you donate to a charity, you can claim back the amounts donated to any registered Public Benefit Organisation (PBO). You can claim up to 10% of your taxable income. If you’ve contributed to a charity, request that they issue you with a PBO certificate which you can submit to SARS.
If you donate above 10% of your taxable income, you can carry forward the amount to the next tax year and have it deducted then (as long as it remains under the limit).
Home office expenses
If you work mainly from home in a dedicated space, like a study or office, you may be able to claim some costs associated with that space. These include rent, rates, interest on mortgage bonds, electricity and maintenance. The amount claimed for rent and electricity, for example, will need to be proportional to the office and cannot be for the entire property.
Rental property costs
If you own a property and rent it out to someone else as an additional income, you can deduct some costs associated with that property. These include maintenance costs, interest on bond payments, rates and taxes paid on the property, water and electricity, levies, depreciation on furniture in the property and rental agency fees. Ensure you keep records of the expenses related to the rental property to claim.
If you belong to a medical aid, you are entitled to some tax deductions from SARS. Medical aid contributions are deducted in the form of tax credits. Your employer will usually handle this by adjusting your tax contribution. If you have medical aid outside of your employer, you will be able to claim credits for your contributions by submitting documentation from your medical aid.
You will also be able to claim out-of-pocket expenses. These are fees you’ve covered that have not been reimbursed by the medical aid, either because they are not covered in your plan or you have run out of member funds.
What can you claim if you run a side business?
More South Africans are supplementing their primary income earnings from a part-time business or freelance job. If you are operating as an individual rather than a company, you are a sole proprietor and become a provisional taxpayer. As a provisional taxpayer, you will need to pay taxes in August and February.
Your income needs to be declared to SARS, but there are a number of deductions you can claim.
As a business owner, you can use your net losses to offset any tax you pay on your primary income during the first two years. You can also claim any expenses used in running your business, such as Wi-Fi, home office expenses, inventory or accounting fees. Provisional taxpayers are often flagged for verification, so it’s important to show the receipts of all expenses.
Read about the SARS success story in Public Sector Leaders