Here are four ways that you can save with tax deductions:
- Medical scheme shortfall payouts. Taxpayers can claim deductions for their contributions to medical schemes, and you can also claim for out-of-pocket payments for medical products once your savings have dried up.
- Retirement Annuity claims. If you make payments towards a pension, provident fund or retirement annuity, you can claim deductions on taxable income. If you donate to a public benefit organization, you can also claim against taxable income.
- Tax-free investments. if you have participated in a tax-free investment, interest earned is exempt from tax. Other investments could be partially exempt – up to R23 800 exemptions for those below 65 and up to R34 500 exemption for those older than 65.
- Travel claim. If you use your vehicle for work and you can prove to Sars that a portion of your travel expenses are for work, then you can claim for that. Sars has a tracking device that you can plug into your cigarette lighter space in your car, so you don’t have to keep log books any more.
If you work from home, as many employees and freelance people do, there are deductibles especially designed for you.
If you are officially employed but can work 50% of the time from home or a freelancer who works continually from a home office, then you qualify to claim on tax. In these instances, you are required to have a home office, and not merely a space used on the dining room table, or a TV room in which you can hold meetings.
Home office is needed
A separate space is officially needed. To work out how much you can deduct, you must calculate the square meterage of the home office as a percentage of the total space of your home.
If you are a salaried employee, you can deduct this percentage of the total cost of rent or interest on a bond, repairs to premises, cleaning and maintenance costs, rates and taxes, and certain repairs.
Certain employees can also deduct business expenses such as phone costs, stationery costs, repairs to office equipment and courier services. Freelancers can deduct all their business expenses.
You should note that you may not deduct expenses such as building a separate office on your property or the cost of purchasing office equipment and furniture.
Get the full lowdown
So, if you spend a lot of your time working from home, it will pay you to speak to a tax consultant or accountant and get the full lowdown on what can or can’t be claimed.
As more people are working remotely, or off-site now than ever before, saving on the costs of commuting to the office, or working as freelancer and having the independence and freedom of working from home, knowing what to claim for has taken on more pertinence.
Especially as a freelancer, there may the complete independence of being your own boss, but there is also the insecurity of not having add-ons like medical aid, pension fund and travel allowance.
All these items must be taken care of yourself. You can’t add wildly onto your rates either as you’ll price yourself out of the market. It’s good to know, then, there are a host of deductibles for tax than you discuss with your accountant.