Use your tax deductions before February 29

Most financial decisions you make have a tax impact.
Most financial decisions you make have a tax impact.

This is a leap year, so February 29 marks the end of the financial year. All information up to this date will be included in your 2019/20 tax return – including all tax deductions. Before the end of the month, do the following:

  • Top-up your retirement fund by investing up to 27.5% of your income tax-free to a maximum of R350 000. It is a great way to reduce your tax burden and secure your retirement at the same time.
  • Use your R33 000 tax-free yearly savings allowance. If you haven’t already maximised this benefit, pay in a lump sum before the end of the month.
  • Write down your odometer reading if you claim for travel expenses for business purposes. You also need to keep a log book, which you will need to submit with your tax return later in the year.
  • File your expenses that you are able to claim as tax deductions, including medical expenses. If you don’t have copies, request statements and proof of the payments. If you claim medical expenses, you should try to put all medical expenses through your medical scheme – even if it does not pay, it will provide a single record for the SA Revenue Service.
  • If you have R100 000 to invest and you’re looking for some tax relief, consider investing in a Section 12J Fund, which is a tax incentive by government to encourage investment into certain sectors. Any upfront investment is fully tax deductible, however, the investment must be held for at least five years and incurs capital gains tax on the full value on exit.
  • If you are planning to sell assets such as shares or unit trusts, spread the sale over February and March to stretch the tax burden over two financial years and benefit from the R40 000 tax exemption per tax year.

As a general rule, try to make sure your paperwork is kept up to date throughout the year so you don’t end up in a panic when it’s time to file.


Maya Fisher-French
Personal finance journalist
City Press
p:0117139001
w:www.mayaonmoney.co.za  e: maya@askmaya.co.za
      
 
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