The 2023 tax season started on 7 July 2023, and the deadline to file your return is October 23 2023 for individual taxpayers. While filing has been open for over a month now, you’re probably looking into ways to save yourself tax for next year. A fresh start, a chance to be more thorough and do better.
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Thanks to tax experts, TaxTim, here are five ways to save yourself tax for 2024. Everyone’s tax affairs differ, of course, so not all five may be applicable to you. But you may very well save yourself tax if you enact even just a few of them.
SAVE YOURSELF TAX
1. OPEN A TAX-FREE SAVINGS ACCOUNT
As we detailed in our story about what to do if you owe SARS money, you’re taxed on earnings from any investments you may have. TaxTim says SARS very often under-tax these throughout the year. Meaning you’ll end up owing the taxman when you complete your tax return.
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Almost all financial institutions offer tax-free accounts – Investec, Santam, Discovery, Old Mutual, etc – and they’re comprised of a combination of unit trusts, fixed deposits, bonds and other financial products.
Crucially, the interest and dividends earned is tax free up until a certain limit:
- R36 000 per tax year.
- Lifetime limit of R500 000.
The way to save yourself tax with one of these savings accounts comes when you withdraw your growth/earnings on the investment. This can be done tax free.
2. RETIREMENT ANNUITY
This is a well-known way to save yourself tax, says TaxTim. Contributions towards any pension, provident or retirement annuity (RA) are tax deductible up to a limit of 27.5% of the greater of your taxable income (to a maximum of R350 000 per year).
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Don’t worry if that sounds a little complicated. What you need to know is if you have excess cash, you can top-up your retirement savings yourself by contributing to a retirement annuity fund.
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This is over and above the pension and provident fund contributions structured via your employer. The only catch is you cannot access these retirement funds until you are 55 years of age. Either way, you’ll save yourself tax.
3. CONTRIBUTE TO CHARITY
TaxTim says a contribution to a non-profit or Public Benefit Organisation (PBO) has special approval from SARS. These organisations will most likely be involved in healthcare, education, poverty alleviation, housing, conservation, environmental and culture.
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Contributions to registered PBOs are tax deductible up to a limit of 10% of your taxable income. Click the link of SARS approved PBOs HERE. Any donations exceeding this limit are carried forward and can be claimed as a deduction in the following tax year. To claim the tax deduction, you must ensure you obtain the correct tax certificate from the PBO.
4. KEEP A LOGBOOK OF WORK TRAVEL
A travel allowance – if you receive one – is part of your taxable income. Otherwise known as a taxable fringe benefit. SARS includes 80% of the travel allowance for tax purposes. But if you keep a detailed logbook of business mileage, you can claim a travel deduction to save yourself tax. TaxTim has a handy Travel Deduction Calculator and APP which you can click on HERE.
5. JOIN A MEDICAL AID
If you contribute to a Medical Aid throughout the year you receive a fixed monthly tax credit as the primary member and a further credit for every dependent thereafter. SARS calls this the Medical Schemes Fees Tax Credit, it doesn’t take your taxable income into consideration and is a direct way to reduce your tax liability each month.
If you have any questions/suggestions about ways to reduce your tax contribution, leave a comment in the comments section below.
Don’t forget that tax season runs until October 23 2023 for individual taxpayers.
This article is for informational purposes only and should not be construed as financial, tax or legal advice. For further details consult the SARS website or get in touch with a tax specialist, like TaxTim.
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