The most common Tax deductions that are overlooked or missed by most individuals:
If you are donating to a registered PBO (Public Benefit Organisation) you can deduct 10% of your taxable income for these donations. If you exceed the 10% deduction for the year, the balance can be carried over to utilize in the next tax year.
(Please ensure that you obtain the tax certificated, called a section 18A certificate, from the Organisation you are donating to – as a supporting document)
Travel Allowances / Claims
You are allowed to deduct towards a travel allowance or claim if:
- You have the use of a company vehicle fringe benefit with the following codes on your IRP5 (3802, 3816)
- You are a commission earner (with more than 50% of basic income from commission)
- You receive a travel allowance and the following codes appear on your IRP5 (3701, 3702)
- You are an independent contractor, self-employed or freelancer
If you can identify with any of the categories above, you will be allowed to claim km’s on the use of your vehicle for traveling for business purposes.
It is VERY important to keep a logbook for the business km’s traveled (excluding any home to office, and office to home km’s) this will be your supporting document if SARS audit your return and claims. Valid reasons and destinations will also need to be completed in the logbook.
ALSO it is very important to record your car’s KM readings as following:
1 March – begin km reading
28 February – end km reading
SARS will also need to know the following details on your vehicle:
Car Make, Car Model, Car Registration Number, Cost Price.
If you drove more than 1 vehicle, you also need to record all of the above for that vehicle.
Without a valid logbook, SARS will disallow any expenses claimed towards a travel allowance.
If you contribute to a medical aid, you will receive a Tax Credit per each member on your medical aid, this is a direct deduction off your tax liability.
This is only for registered medical aid funds. A hospital plan or GAP cover does not count or qualify for a deduction.
VERY IMPORTANT: Make sure you receive your tax certificate from your medical aid as supporting document. If not received please request this from them, as this will be required to calculate/substantiate tax deduction.
Please also submit any qualifying medical expenses as this may be deducted as an additional medical expense tax credit. This may include any consultations and prescribed medication. These expenses do however work with a formula to see if you qualify for additional credit.
ONCE Again, please keep all paperwork and slips for these expenses, should SARS conduct an audit or review.
Contributions made towards a retirement annuity are tax deductible up to a limit of 27.5% of the greater of your taxable income, no bigger than R350,000 per annum.
For proof of these deductions, you will need to support this with the certificate from the Financial Institution. It will be called an RAF Contribution Certificate (IT3F).
If not send by them automatically after year-end, you can request this from them before doing your tax return.