Retirement Fund Contributions

If you make regular contributions to a retirement plan, pension or provident fund during the tax year you can reduce your taxable income based on the contributions made. The contributions made to retirement accounts are deductible up to 27.5% of higher of the taxable income or remuneration (up to R350,000 annually). While the payment for the provident fund and pension funds are directly deducted by the employer, tax payers can also choose to contribute to a retirement annuity fund. Retirement annuity fund contributions have to be made personally and tax payers can save up on tax payments while saving money for their retirement at the same time in this manner.

Medical Expenses

Tax payers can claim back the fees paid to a registered medical scheme for the medical treatment of the tax payer or the dependents. The medical expenses are claimable on a monthly basis, the rates are et annually and the rates for the current tax year are as follows

Main member	R319
Main member and first dependent	R638
Additional dependents	R215

 

Tax Free Savings account

Another simple way to reduce the tax liability is by investing your savings into a special tax free savings account, the savings in these accounts are deposited into various financial products. The return generated on these savings accounts in the form of profit, markup or interest are tax deductible, in addition to this the withdrawals are also tax deductible. This therefore is a convenient way to invest and grow the savings in a tax free manner.

Donate to registered charitable causes

Donations to registered charities are allowed as an admissible expense perhaps in every jurisdiction across the world. Therefore donation to registered non-profit organizations are tax deductible up to 10% of taxable income and if the donated amount exceeds this 10% annual limit then it can be carried forward to the next tax year to be claimed as a deductible expense. It must be noted that in order to be eligible for tax deduction the donation must be made to a registered public benefit organization.

Deduction for travel allowance or company car

Travel allowance or the usage of a company provided car is a taxable benefit and is therefore added to the taxable income. However keeping a logbook to record the mileage for business purposes can allow the tax payer to claim deductions in taxable income.

Expenses incurred to earn commission income

Tax payers whose commission income is greater than 50% of the taxable income can claim all expenses incurred to earn the commission income. All such expenses can be used to deduct the taxable income, however the tax payers must be diligent in keeping all relevant invoices and bills that may help them qualify for deductions under this category.

Non salaried individuals

Non salaried individuals such as self employed persons or freelancers can claim all business related expenses that were incurred to earn their taxable income and therefore reduce their taxable income.

These are all the standard deductions or exemptions that can reduce your taxable income under South African tax laws.