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Tax season open - What can I claim as a deduction to reduce my tax?

Posted 11 July 2012 under Tax Questions



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Salaried employees all over the country are busy filing their tax returns in the hope that perhaps they will be due a refund. For most who earn income from their employer they have already paid their taxes in the form of Pay-As-You-Earn (PAYE), but now what? Although salaried employees are limited, by tax law, as to what they can deduct from their income, there are a few things that can be claimed. Deductions against income reduce ones Taxable Income and thus reduce the amount of tax owing to SARS. The allowable tax deductions are:

  • Medical Aid contributions and other medical expenses

  • Income protection contributions where you take out a policy with a service provider in the case you are no longer able to work anymore

  • Donations paid to registered Public Benefit Organisations - for example a charity

  • Retirement Annuity and Pension Fund contributions which save towards the day you retire

  • Certain legal costs which relate to any income you may have earned

  • Wear & Tear on assets used for work - for example computer equipment, mobile phones, machinery

  • Bad debts you may have had during the year (A bad debt is income you have earned but you cannot collect - a client refuses / is unable to pay!)

  • If you mainly work from home and mostly earn commission then costs relating to the office in your home


Travel expenses will get taken into account as well - you must keep a logbook detailing all travels. The opening and closing km's for the tax year as well as all the km's you traveled purely for business purposes must be recorded. Also keep all the details of the car you used!

Unfortunately these are the only deductions you can claim if you are a salaried employee. s23(m) of the act limits these deductions to those above. So when completing your income tax return and planning for your future financial wellness remember what items you can deduct or claim.

Happy Filing

 

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Heath says:
12 July 2012 at 9:14

As a physiotherapist I am required to join both the Health Professionals Council and SA Society of Physiotherapy. Are the membership fees for these professional organisations tax deductable? Have heard conflicting info. Thanks.


TaxTimTaxTim says:
12 July 2012 at 18:11

Hi Heath,

Unfortunately, if you are a salaried employee and work full time you cannot deduct these costs. There is a rather obscure reason, but the law doesn't allow it. If you work for yourself and are not a full time salaried employee you will be able to deduct these expenses and all other business related costs. You should try get your employer to pay these registration fees, they will get a tax deduction for it. If you work for a practice, your employer should definitely consider doing this for all the staff.

Regards,
Tim


Heath says:
12 July 2012 at 18:38

Ok thanks for the advice.


TaxTimTaxTim says:
12 July 2012 at 18:44

Always a pleasure!

Feel free to ask if there is anything else

Regards,
Tim


Jaco Nieuwoudt says:
16 July 2012 at 12:48

Can any MPS (Medical Protection Society) costs be claimed for a permanent employed doctor? Can it be seen as part of income protection?


TaxTimTaxTim says:
16 July 2012 at 16:33

Hi Jaco,

Unfortunately you cannot deduct these payments for income tax purposes. As a full time salaried doctor you are limited. Income protection applies where you can no longer perform your duties and in fact can only be deducted where the payout is taxed on payout. MPS would be similar to taking out car insurance in the event of something happening. You should attempt to get your employer to pay for this as part of their company policy. It would be a tax deduction for them and you would be able to benefit from the protection.

I hope this helps.

Regards,
Tim


Candice says:
17 July 2012 at 15:04

Hi Tax Tim

I am employed full time, do not belong or pay any medical aid contributions - am I able to claim medical expenses paid for during the course of the year (doctors and pharmacy bills)?

Many thanks
Candice


TaxTimTaxTim says:
17 July 2012 at 16:04

Hi Candice,

Thank you for the question!

Yes you can definitely claim for these allowable medical expenses. However the only catch is that SARS will only allow a deduction for any amounts greater than 7.5% of your taxable income. So basically take your income and multiply by 7.5%, then work out how much your medical expenditure is and any amount over that can be deducted. You would enter this next to source code 4020 on your tax return.

If you use TaxTim to assist in completing your return you will get asked all these questions and your return will be completed accordingly.

I hope this helps?

Regards,
Tim


joe says:
23 July 2012 at 10:49

Hi Tax Tim,
I am a manager currently studying for an accredited MBA which is funded entirely by myself because the company I work for does not have a policy of paying for training and development costs.
The MBA is directly related to my work as a manager.
Can I deduct the student fees, textbooks, stationery and registration costs ?
These are sizeable amounts.
Thanks.


TaxTimTaxTim says:
23 July 2012 at 13:43

Hi Joe,

Unfortunately MBA costs cannot be deducted for income tax purposes. Doing an MBA is seen as a way of improving your income earning ability not as actually earning income. So for tax purposes it is seen as more of a capital investment and despite it being directly related to your employment it does not result in extra income.

I wish I had better news for you, if you could push your employer to pay these costs somehow, they could claim a tax deduction for a portion of the costs.

If you have any further questions, please feel free to ask away.

Regards,
Tim


Anthony says:
14 August 2012 at 12:23

Hi Tim

Can I claim for income protection premiums paid by my employer for my benefit?


TaxTimTaxTim says:
14 August 2012 at 13:02

Hi Anthony,

Yes you can claim this amount because it will be taxed as a Fringe Benefit in your hands. You are allowed the deduction for Income Protection, but check with your employer if they have already taken this into account when calculating employees tax. If you are using eFiling, you must include this in your return, click yes to the question which asks, 'do you make contributions to a retirement annuity fund?' This will open up the correct question. Or use TaxTim and let Tim guide you through the whole process.

Regards,
Tim


Quintin says:
2 September 2012 at 0:40

Hi Tim!

I am a fixed salaried software developer. I have purchased a laptop to be able to do my work. Can I claim this expense from my tax?
I have also purchased a large screen, also to do my work easier and more efficiently. Can I perhaps claim this as well?

Thanks in advance!
Have a good day.


TaxTimTaxTim says:
2 September 2012 at 8:52

Hi Quintin,

Thanks for the question!

You can only claim the screen and laptop if you use them mostly for work and your company did not pay or reimburse you for the amount. We have a depreciation table on the TaxTim website that helps you determine how much you can claim for these assets. Remember to keep records as SARS may want to see the invoices as they are quite strict about these sorts of claims.

I hope this helps?

Regards,
Tim


Quintin says:
7 September 2012 at 11:29

Hi Tim!

Yeah, that helps allot!
I do use the laptop and screen almost exclusively for work, and no, my company did not pay at all :)

Thanks again.
Let's hope the taxman isn't too difficult!

Enjoy your day.


TaxTimTaxTim says:
7 September 2012 at 16:58

Hi Quintin!

Good luck with SARS and let me know if I can help with anything else!

Regards,
Tim


Shane says:
21 September 2012 at 17:22

Hi Tim
I have one question for professional fees deduction. I was not employed for the last two months in FY2012 (Jan&Feb), and only paid my professional membership fees (to SAICA) afterwards f0r 2012 subscription. Can I deduct it? And do you know the SOURCE CODE?
Thank you


TaxTimTaxTim says:
21 September 2012 at 21:56

Hi Shane,

You won't need a source code as when you complete this on the return, there would be a specific block for it. However you can only make this deduction if you legitimately offer consulting services or other income generating activities which you can demonstrate that paying your SAICA fees was an expense incurred in the production of this income. A normal salaried employee is not allowed to claim professional fees as a deduction. If you are, in the new tax year, acting as a consultant and don't intend to go back to work as a salaried employee then you can definitely claim this as an expense.

Regards,
Tim


Quintin says:
25 September 2012 at 20:15

Hi Tim, last question, what would the appropriate code be to use for such a deduction. I tried googling it, but cannot seem to find it. Thanks in advance.

Have a nice day.
Quintin


TaxTimTaxTim says:
25 September 2012 at 20:59

Hi Quintin,

You would complete this under other deductions and expenses on the tax return. There is a specific block on the tax return for Depreciation, you would include it there. The source code next to it is 4027, but you won't need to fill that in.

Let me know if you get stuck.

Regards,
Tim


Quintin says:
25 September 2012 at 21:16

Hi Tim.
Sorry for bothering AGAIN :p

I cannot seem to find a block for other deductions.
Just the normal deductions block. But when I enter the 4027 code there, it sais the code is not valid, and gives me a list of valid ones.

This is on the ITR12 form, under the Employees Tax Certificate Information [IRP5/IT3(a)] section.

Thanks for all your help again!
Cheers


TaxTimTaxTim says:
25 September 2012 at 21:43

Hi Quintin,

Not to worry, this is what we are here for. You must not change anything on the IRP5/IT3a section, this is only for IRP5's or IT3a's provided by your employer or someone you have earned remuneration from. In the first page of the ITR12, where you clicked yes and no to different sections, you must click yes to the very last block and that will open a series of other blocks. The very last one there, "other deductions" click yes there. It will then open up a new page where you can enter the depreciation.

Alternatively you can use the TaxTim service which will ask you all these questions then complete your return for you. We also guide you as to how to submit your return, by showing you how to populate the creation page based on the answers to your questions.

Regards,
Tim


Quintin says:
25 September 2012 at 21:51

Tim, i feel like an idiot... Thanks so much! I should really learn to read complete sentices when doing this hey? Hehe

Thanks again, and thanks so much for helping people!
Have a awesome day!
Cheers


TaxTimTaxTim says:
25 September 2012 at 22:11

Hi Quintin,

Precisely why we are here, these forms are very confusing! So only a pleasure!

Have a good evening as well!

Regards,
Tim


Philip says:
10 October 2012 at 15:59

Hi Tim

I am working for a new start up company so I am receiving a salary but I would like to know can travel expenses still be claimed wit ha log book even if I'm not receiving any travel allowances but I am using my car and petrol for business trips.


TaxTimTaxTim says:
10 October 2012 at 17:08

Hi Philip,

Unfortunately, as a salaried employee, you can only claim your travel expenses if your company pays you a Travel Allowance or reimburses your travel that you do for work. So the bad news is you have to spend that money yourself unless your employer changes your salary package or offers to reimburse the work travel you do.

Regards,
Tim


CLAUDETTE says:
23 October 2012 at 10:50

Good day Tim

I've heard that if you employ someone to clean your home once a week and pay them R150.00 per day (52 weeks X R150.00 =R7800.00 plus a bonus of +-R600.00), you can arrange for an affidavit and claim from SARS. Is there any truth in this? Many thanks and best regards.


Mel says:
14 December 2012 at 7:59

Hi there
Please assist I am a south African resident, I have medical aid with my own employer. I have my parents who are both pensioners and are dependent on my income n their own medical aid in my father's name. I pay the monthly debit and chronic medication levy to discovery.
Am I allowed to include this in my medical aid deductions and expenses . The tax certificate is not in my name.

And if so why when I call sars they tell me I can't claim for anything that Is not in my name even if I have proof of payment. Please assist

Many thanks Melanie


TaxTimTaxTim says:
15 December 2012 at 16:56

Hi Claudette,

What would you be getting the affidavit for?

Regards,
Tim


TaxTimTaxTim says:
15 December 2012 at 17:03

Hi Mel,

Generally you are allowed to claim amounts spent on medical expenditure for people dependent on you so this would include your parents in this case. Although the tax certificate isn't in your name, you can show proof that you make payment. If you can have the medical aid write a letter stating that you pay for the premiums and if SARS asks for proof you would need to demonstrate that they are dependent on you. As long as the contribution is made to a registered medical aid you will be fine.

Regards,
Tim


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