Claiming for tax deductions

It’s tax season, and while sorting through your documents and getting them ready for submission, it is important to remember that there are certain expenses that you can claim tax deductions on.
 
Annemie Nieman, legal technical adviser at PSG, said that even if you do not have to submit a tax return, it may still be in your favour to submit one, if you qualify for certain tax deductions.
 
Individual deductions
 
According to the South African Revenue Service (SARS), the expenses that can be claimed for by tax payers against their salary, include:

• Medical scheme contributions
• Pension fund contributions
• Retirement annuity fund contributions
• Income protection
• Legal costs – under certain qualifying circumstances
• Wear–and-tear – in respect of certain assets
• Donations – to approved bodies
• Repayable amounts – amount received for services rendered as refunded by that person
• Bad and doubtful debts – employment related

 
When don’t you have to submit a tax return?
 
Nieman highlighted that those excluded from having to submit a tax return are people who have earned an income from only one employer and earned less than R350 000 for the period 1 March 2014 to 28 February 2015.
 
To qualify for not having to submit a tax return, you also have to:

• not have conducted any trade for the financial year
• not have received any travel or accommodation allowances
• not have had a capital gain or loss of more than R30 000
• not have received interest of more than R23 800 (for taxpayers below 65) or R34 500 (for taxpayers 65 and over) from a South African source
• not have any assets abroad

 
“If you fall into this category, you are correct in thinking that you do not have to submit a return. However, by not submitting, you give up the opportunity to claim back some of the tax you have already paid to SARS,” revealed Nieman.
 
According to Nieman, this also applies to who earn more than R350 000 and have to submit a tax return, as many “taxpayers are unaware of the qualifying deductions that they can claim back.”
 
For example, if you contribute to a retirement annuity (RA), regardless of the tax bracket that you fall into, you are eligible for a tax deduction.
 
If a 35 year old taxpayer is earning R340 000 per year, s/he would pay R63 384 for the 2015 tax year if no deductions are claimed, explained Nieman.
 
However, if “the taxpayer submits a tax return and claims a deduction for retirement annuity fund contributions of R30 000, the tax payable would reduce to R54 084. That is a reduction in tax and a reimbursement from SARS of R9 300 for the year,” added Nieman.
 
For more information on tax deductions, click here.