Your 2020 tax write-off cheat sheet
The 2020 tax season is upon us, and after the year we’ve all had we’re sure you’re looking forward to finding a way to increase the value of your tax return as much as possible. To make things a little easier, we’ve compiled a handy tax write-off cheat sheet you can reference while you get your paperwork in order prior to e-filing or handing it over to your accountant.
This is a list of costs that are deductible, according to SARS:
Retirement annuity fund contributions
Personal contributions towards retirement funds are deductible for tax up to a limit of 27,5% of the greater of your taxable income or remuneration (to a maximum of R350,000 per year). Contributions to pension funds and provident funds are likewise deductible – check with your financial advisor for more info in this regard.
If you contribute to a medical aid, you will receive a fixed monthly tax credit for each member featured on your policy. SARS calls this rebate the ‘Medical Schemes Fees Tax Credit’ – it is calculated as a flat rate per month.
In respect of certain assets, wear and tear on personal assets may also be claimed, e.g. if you use personal devices like laptops or cell phones for work. The deduction is based on the base cost of the asset, as well as the usage split and the number of years you’ve owned it. Be ready to provide a letter from your employer to confirm that this deduction is in fact allowed.
Donations to approved charitable bodies
Charitable contributions to registered entities are deductible. These bodies will normally supply you with a tax certificate to this effect. If they don’t do so of their own accord, make a formal request.
Certain home office expenses
Many people who have previously never worked from home had to do so under COVID-19 lockdown regulations in the year. As such, there are a lot of questions about home office expense claims. The answer is, yes, there are certain home office expenses that can be claimed. You can read more here.
Travel claims, legal costs (under certain qualifying circumstances) and commission expenses are also on the table – so check in with your financial advisor on those!
Keep these South African tax write-offs in mind while you prepare your paperwork to reap the benefits of the sound financial choices you made in the 2019/20 tax year. In the meantime, feel free to reach out to a member of the Experity team to find out more about our financial services; we’re here to help you make sense of all the accounting mumbo-jumbo.