As the end of the tax year approaches, it’s essential to be proactive about your finances to ensure you are maximising your tax savings. At IQ Accounting, we understand the importance of effective tax planning. Here are some practical strategies to help you save on personal income tax.
- Maximise Your Retirement Contributions
Contributions to retirement annuities, pension funds, and provident funds are tax-deductible up to 27.5% of your remuneration or taxable income, capped at R350,000 per year. Maximising your contributions will help you save for your future and reduce your taxable income.
- Utilise Tax-Free Savings Accounts
South African taxpayers can invest up to R36,000 per year in a Tax-Free Savings Account (TFSA) without paying any tax on the interest, dividends, or capital gains earned. Over your lifetime, you can contribute a maximum of R500,000, making it a great long-term investment option with immediate tax benefits.
- Claim Medical Expenses
You may be eligible for a tax credit if you or your dependents have significant medical expenses. Contributions to a medical scheme, as well as out-of-pocket medical expenses, can be claimed. Keep detailed records and receipts of all your medical expenses throughout the year to ensure you can claim the maximum allowable amount.
- Take Advantage of Deductions for Home Office Expenses
With the rise of remote work, many employees can claim home office expenses. If you work from home regularly and have a dedicated office space, you can deduct a portion of your rent, utilities, internet, and office supplies. Ensure you maintain accurate records and that your home office meets the South African Revenue Service (SARS) requirements.
- Invest in Section 12J Venture Capital Companies
Investing in a Section 12J Venture Capital Company can provide significant tax benefits. Investments made before June 30, 2021, could be deducted from taxable income, but this incentive has lapsed. However, reviewing your investment portfolio with your accountant is always a good idea to ensure you utilise all available tax-saving opportunities.
- Donate to Registered Charities
Donations to SARS-approved Public Benefit Organisations (PBOs) are tax-deductible, up to 10% of your taxable income. Ensure you receive a Section 18A certificate from the organisation to claim your deduction. Charitable giving benefits those in need and reduces your tax liability.
- Review Your Tax Status Regularly
Regularly reviewing your tax status with a professional accountant can uncover additional opportunities for savings. Changes in legislation, income, or personal circumstances can affect your tax liability, and staying informed is vital to optimising your tax position.
Effective tax planning is an ongoing process that requires attention to detail and up-to-date knowledge of tax regulations. By implementing these strategies, you can reduce your tax liability and keep more of your hard-earned money. Our experienced team is here to assist you in navigating the complexities of tax law and ensuring you make the most of your tax-saving opportunities. Contact us today to schedule a consultation and plan for a more secure financial future.