We’re aware that sometimes taxpayers may not understand all of the deductions which appear on the tax return. And because of this, expenses that could have been deducted get missed. To help make things easier for you, we’ve explained some of these less understood tax deductions which may be overlooked by taxpayers. They all appear in the Other Deductions section of the ITR12.
The s11(nA) and s11(nB)
If an employee is in breach of an agreement with their employer, they may be asked to pay back a benefit they received from them e.g bonus, maternity leave benefit, bursary, sign on bonus etc.
This amount may have been taxed already and therefore be included as income on the employee's IRP5. In this situation, the taxpayer can claim the s11(nA) and/or s11(nB) deduction in order to deduct the benefit from taxable income and therefore reverse the tax that was already paid on it.
Allowable accountancy fees
Even though this field is open on the return to all taxpayers, it is important to understand who is allowed to claim this expense.
Taxpayers who earn a salary only, are not allowed to claim this expense (even if they paid for the services of an Accountant, Tax Practitioner or a financial institution during the tax year).
SARS allows only the following types of taxpayers to claim this expense: commission earners, freelancers, sole proprietors, taxpayers who earn investment income (which is more than the accountancy fee claimed), rental income earners and pensioners (whose income is administered by a financial institution).
Bad debts claim
A bad debt is an amount that the taxpayer was due to receive as income but never did and will most likely not receive it in future. This may happen with commission earners, freelancers or employees who leave a company before their bonus is due to be paid to them. In order to claim a bad debt expense, the amount that was due to be paid, but was never received by the taxpayer, must reflect on the taxpayer's IRP5 or be included in turnover/sales (in the case of sole proprietors). In this situation, the taxpayer can claim a bad debts expense in order to reverse the tax that was charged on the income that was never received.
The next time you complete your tax return, make sure you don't miss out on any of these deductions which may apply to you!