During tax season, citizens will flock to the South African Revenue Service’s (SARS) branches to submit their annual tax returns. However, when doing so, some people always focus on remuneration tax and forget about other deductions.
Justmoney spoke to Adelaide Kekana, a tax consultant at Tax Consulting South Africa about allowable deductions to claim when submitting your tax returns.
Tip: Use our tax calculator to see how much income tax you will pay this year.
If you have donated to a Public Benefit Organization (PBO), and have received a donations receipt, you can claim this on your return. The allowance is however limited to 10% of your taxable income (income that is subject to normal tax), and the excess will be carried over to the next assessment year.
2. Expenses relating to rental income
Expenses that can be claimed against rental income, among others, are commission fees, legal fees, electricity, rates and taxes, insurance, interest on bond, repairs and maintenance relating to the property, telephone costs, travel cost, levies, and any other expenditure incurred that relates to rental income.
If these expenses exceed the rental income received, the loss can be set-off against the total income received to reduce the tax liability.
3. Commission earners
To be classified as a commission earner, your commission income must be 50% or more of your total remuneration. The expenses that you can claim must have been actually incurred in the production of income, and these are, inter alia; your cellphone or telephone bill, internet, wear and tear on a laptop, home office expense and travel costs – provided a record of these expenses was kept.
4. Medical Tax Credit
If you belong to a medical scheme, you can submit a claim. The Medical Tax Credit (MTC) consists of two amounts: medical scheme fees tax credit and medical expenses tax credit.
According to SARS, MTC is not refundable, but it reduces the amount you pay towards tax. If you are paying your contributions through your employer, your employer will adjust your income tax. However, if you are retired or self-employed – in other words, making your own contributions – you can claim the MTC on assessment.
5. Travel allowance
Do you use your car for the company’s benefit? If you receive a travel allowance, you should submit your tax returns. Tax laws allow employees who receive a travel allowance to claim a deduction on the assessment of their annual income tax return for the use of a private motor vehicle for business purposes.
For you to claim the deduction, you must keep a logbook to record all the business kilometres. According to SARS, the logbook must contain the date of travel, kilometres travelled, and travel details (where to and reason for the trip).
What are the benefits of submitting your tax return?
According to Tax Consulting SA, submitting your return to SARS means that your records with SARS are complete, you are tax compliant and can obtain a Tax Clearance Certificate. This comes in handy should you wish to apply for a mortgage bond, or should you wish to financially emigrate from South Africa.
Another advantage is that you might avoid penalties imposed by SARS for non-compliance.
READ MORE: Why tax evasion shouldn’t cross your mind
There is a misconception that filing a return means you are obligated to make payment to SARS, or you will automatically get a refund, says Tax Consulting SA.
Filing a return means that you are declaring your annual income earned during the year of assessment, as well as the total tax paid that was already withheld from you by your RSA employer in terms of the Pay-As-You-Earn.
SARS pays a tax refund, where your tax liability is less than your taxes already paid or withheld.
If you’re having problems filling in your tax returns, click here to see how Justmoney can assist you.