save on tax taxes

There are ways you can save on your taxes and become tax-savvy. Image via Unsplash

Dear taxpayers: Don’t let tax get you down, save by doing these four things

The cost of living in South Africa is no joke. This is why saving every penny is an absolute must. Find out how you can save on taxes here.

save on tax taxes

There are ways you can save on your taxes and become tax-savvy. Image via Unsplash

The cost of living here in South Africa is higher than it’s been in a long time. Many households are struggling to get by while trying to find ways to stretch their rand. While it appears nothing is being done to help the struggling working class, there is one way for them to help themselves – by saving on tax.

A financial adviser recently shared some advice for those looking to be more tax-smart.

Save on tax by doing these four things

The rising price of food, fuel, housing, and healthcare services has left many South Africans feeling desperate and destitute as they look for more and more ways to live a decent life.

One of the ways to save a pretty penny according to Leonie O’ Connell, a financial adviser at Momentum, is to try and become more tax-savvy.

“More and more South Africans are looking towards tax returns and tax breaks as a way to relieve the strangling pressure of an economy in recovery.

“There are ways and means to get a portion of your tax contributions back, if you know how to package your returns properly and structure your portfolio,” O’ Connell tells Business Tech.

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How to make the most of paying tax

Work from home

As a permanently employed person who has been working from home, you can claim for those expenses. According to SARS, work-from-home employees who use a room in their home as an office can ask to be remunerated for the cost of using the room as an office.

“This comes with a few conditions,” said O’Connell. “Your office needs to be in a dedicated space or room in your home and set up for the purposes of trade. You had to have performed more than 50% of your duties from this home office.”

For earners where more than 50% of remuneration consists of commission or variable payments based on work performance, SARS requires more than 50%, BusinessTech reports.

You can also start listing off the expenditures you have incurred while working from home, including rent, repairs to your home, rates & taxes, electricity, internet, stationery, and office equipment.

Make use of your medical aid to contribute to your tax return

According to Business Tech, in 2012, South African Revenue Service (SARS) introduced a medical scheme contribution tax credit; your contributions are deducted from your overall tax liability – i.e. the total amount of tax you need to pay.

SARS calls this rebate the ‘Medical Schemes Fees Tax Credit’ and it applies to the fees paid by a taxpayer to a registered medical scheme for you (as the taxpayer) and your dependant/s.

The credit for 2022 is a fixed monthly amount of R332 for you as the primary member, a further R332 for your first dependant, and R224 for each of your additional dependants.

Utilise your retirement savings

You can provide for your retirement and be tax-savvy at the same time. Every month, ensure that you are putting money away into a retirement savings vehicle.

“A great benefit is that you can deduct the money that you invest in a retirement annuity from your taxable income,” said O’ Connell.

Let your good deed do you good

Section 18A of the Income Tax Act states that you are allowed to donate up to 10% of your taxable income to a charity.

If you want to claim for a deduction, O’Connell says you need to ensure the Public Benefit Organisation is in possession of a Section 18A certificate.

These are the organisations officially granted by the Tax Exemption Unit at SARS.

“By getting all the right documents signed as proof of your donation, you can list your contribution in your tax return and expect a percentage of that back,” said O’Connell.

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