MONEY:

How to get a tax re­bate

Fairlady - - CONTENTS - By Alexa Forbes

1. If I run a side hus­tle – say a dress­mak­ing busi­ness at week­ends – can I claim for those ex­penses?

A: Yes, you can. When fil­ing your an­nual tax re­turn, put the in­come and ex­penses of your dress­mak­ing busi­ness down as a ‘trade’. You can then claim (from the in­come of the busi­ness) any ex­penses that you have in­curred from run­ning that ven­ture. For ex­am­ple, you can claim a home of­fice ex­pense if you work out of a room in your house that’s specif­i­cally ded­i­cated to that

busi­ness. Other ex­penses such as cell­phone and in­ter­net costs can also be claimed if they con­trib­ute to the run­ning of the busi­ness.

2. Is it pos­si­ble to re­duce your tax if you’re paid a salary? A:

Yes, there are many ways to do so. The most use­ful one is to get your em­ployer to pay a por­tion of your salary as a bur­sary for your child. There are con­di­tions to this, of course, pri­mar­ily that you earn R600 000 or less a year, and that the bur­sary isn’t more than R20 000 a year for a school learner or R60 000 a year for a univer­sity or col­lege stu­dent.

3. What’s all this about re­tire­ment an­nu­ities and tax? A:

You can mas­sively re­duce your tax li­a­bil­ity by con­tribut­ing to a re­tire­ment an­nu­ity (RA). It’s the govern­ment’s way of en­cour­ag­ing peo­ple to save. For ex­am­ple, if you’re in the 36% tax bracket you can con­trib­ute R10 000 to an RA and re­duce your tax li­a­bil­ity by R3 600. In other words, you get two ben­e­fits: putting away R10 000 for your re­tire­ment and re­duc­ing your tax li­a­bil­ity by R3 600.

4. Are char­i­ta­ble do­na­tions tax-de­ductible? A:

You may claim a tax de­duc­tion only if the or­gan­i­sa­tion to which you do­nated money is able to pro­vide you with a Sec­tion 18A cer­tifi­cate (see the SARS web­site for a list of in­sti­tu­tions that can do so). Also, you may not deduct do­na­tions in ex­cess of 10% of your tax­able in­come.

5. Can I claim for med­i­cal ex­penses not cov­ered by my med­i­cal aid? A:

Yes, you can. You need to fill in these de­tails on your an­nual tax re­turn – be sure to keep the in­voices in case SARS asks for them. But you’ll have had to have spent a fairly large amount to get a re­duc­tion in your tax li­a­bil­ity. It’s best to en­ter the de­tails of out-of­pocket ex­penses on your tax re­turn and let SARS do the cal­cu­la­tion to see whether you’ll get a ben­e­fit from hav­ing paid these ex­penses.

6. If you’re a full-time em­ployee but are re­quired to work from home in the evenings and over week­ends, can you put in a claim for hav­ing a home of­fice? A:

Pos­si­bly, but only un­der very spe­cific cir­cum­stances. Your em­ployer must re­quire you to work from home and you must work at home for more than 50% of your to­tal time spent work­ing. You must also have a room that is specif­i­cally equipped for use as a home of­fice, and that’s ex­clu­sively and reg­u­larly used for that pur­pose.

7. I use a com­puter at work and a lap­top at home. Can I claim for the cost of my lap­top? A:

If you’ve paid for the lap­top and are re­quired to use it reg­u­larly to work at home, then you may be able to claim for it. If you bought the lap­top for less than R7 000 you would be able to claim the full amount in one tax year (as­sum­ing you qual­ify for this de­duc­tion). The de­tails of this claim will need to be in­serted in your tax re­turn to ob­tain this ben­e­fit.

8. My mother is in her eight­ies and has no in­come, so I pay her ex­penses: levies, rent, med­i­cal as­sis­tance and so on. Can I claim for those ex­penses? A:

You can claim rel­e­vant med­i­cal ex­penses that you have paid on be­half of your mother in a sim­i­lar way to the out-of-pocket ex­penses dis­cussed in Ques­tion 5. Bills for med­i­cal-re­lated nurs­ing homes, doc­tors and hos­pi­tals, and costs for pre­scrip­tion medicines may be claimed.

9. I’ve started a busi­ness that isn’t prof­itable yet, but I do have a small share port­fo­lio. Do I pay tax on that, even though I’m not trad­ing with it and just sit­ting on the shares? A:

If you have a share port­fo­lio that you hold as a long-term in­vest­ment then you will pay cap­i­tal gains tax only when you sell the shares. Each in­di­vid­ual also has a R40 000 an­nual cap­i­tal gains tax ex­clu­sion, so you won’t be taxed on any cap­i­tal gains less than that amount a year.

10. What are your top three tips for get­ting a tax re­fund? A:

1. Max­imise con­tri­bu­tions to your RA.

2. Get an agree­ment in place with your em­ployer to pay part of your salary as a bur­sary for your school-go­ing chil­dren.

3. Read my book!

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