Global Courant 2023-04-13 14:02:40
While the 2024 income tax deadline still seems a long way off, taxpayers are urged to stay afloat to best alleviate their tax burden, said Morné Janse van Rensburg, manager at financial services firm Hobbs Sinclair Advisory.
With recent developments in tax policy over the past two years regarding medical assistance, solar energy financing and more, it has become increasingly important for taxpayers to know how to benefit properly.
Solar energy stimulation
Between March 1, 2023 and February 29, 2024, individuals who install solar panels on the roof can claim a 25% discount on the cost of the panels, up to a maximum of R15,000.
According to Finance Minister Enoch Godongwana, this could reduce a taxpayer’s tax liability in the 2023/24 tax year and is available for one year.
Hobbs Sinclair said you’d be remiss not to jump on this bandwagon sooner rather than later, as supplies are already limited and waiting lists have been running for a few months.
“PV solar panels should be installed at a residence that an individual uses primarily for domestic purposes,” the agency said.
The company noted that PAYE taxpayers would then be able to claim the discount on the assessment during the 2023/24 filing season, while provisional taxpayers would be able to claim it against their provisional and final payments.
“It is worth noting that only the person who pays for the solar panels can claim the discount and that the solar panels must be commissioned on or before February 2024 accompanied by a Certificate of Conformity to qualify for the discount.” .
Medical assistance
Taxpayers also qualify as major medical aid members for tax credits because of their monthly contributions.
In addition, one may also qualify for additional medical aid tax credits based on medical expenses paid by oneself or a dependent that are not reimbursed by medical aid.
Hobbs Sinclair said these expenses included:
Services rendered and medicines supplied by a duly registered physician, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopedist; Hospitalization in a registered hospital or nursing home; Home nursing services provided by a registered nurse, midwife or nursing assistant, including services provided by a nursing agency; Medicines prescribed by a duly registered physician (as stated above) and obtained from a duly registered pharmacist; Expenses incurred outside South Africa in relation to services provided or medicines provided that are substantially similar to the services and medicines referred to above; All expenses prescribed by the Commissioner and necessarily incurred as a result of a physical disability or disability.
The group said taxpayers often don’t pay such expenses to their medical aid because their medical savings have been depleted or they know it won’t be covered.
“But even if you pay the expenses in full, it’s imperative that they be filed with your medical aid so they can include them on your income tax certificate for the tax year,” Hobbs Sinclair said.
“While SARS has full rights to request the invoices and receipts for these expenses, they are less likely to request the expenses if they are listed on your medical device tax certificate.”
The new monthly health insurance tax credit rates for 2023/4 are R364 for the primary member, first dependent and R246 for each additional dependent.
Retirement annuities (RA)
“While there is no limit to the amount you can contribute to your retirement annuity each year, there is a limit to how much of those contributions are tax deductible,” says Hobbs Sinclair.
There is a limit of 27.5% of one’s remuneration or taxable income – up to a maximum of R350,000 per annum. If an annual contribution exceeds the maximum, the difference is carried over to the next assessment year.
“In addition, if the allowed deductions are not exhausted over the total contribution period, they can be settled at retirement to increase the tax-free portion of the lump sum you will receive when you retire,” the group said.
While many taxpayers are aware of the possible deductions, they often wait until the end of the tax year to determine how much extra they can contribute for further tax deductions.
“Often they want to make an extra investment, but are unable to do so due to insufficient liquidity. However, if they had monitored both their cash flow and their estimated tax liability throughout the year, this could have been avoided,” said Hobbs Sinclair.
Donations
All donations to a SARS-approved charitable organization in a given tax year can be claimed as a tax deduction.
However, this is limited to a maximum of 10% of someone’s taxable income excluding deductions.
“After donating, the organization must issue you with a Section 18A certificate with the date and value of your donation and their relevant details.”
“SARS would not allow any donations claimed for tax purposes without this certificate,” Hobbs Sinclair said.
Read: SARS is after these taxes in South Africa – but its tactics are causing confusion
