From the 1st of September, tax payers who did not accept SARS’s auto assessment can now file their returns. Non-provisional taxpayers have until 16 November 2020 to submit their returns and provisional taxpayers have until 31 January 20201. Many individuals who are now working from home have raised the issue of the ‘home office’ and how to claim tax breaks with regard to this – but there are also other avenues where tax payers can reduce their tax:
Home Office
With social distancing becoming the norm in 2020, the home office has become a reality for many South Africans. If you are a salaried employee but have been working from home in a dedicated space, you are able to claim certain running costs that are associated with that space. These can include your rent, interest on you bond, rates, electricity, cleaning, maintenance relating to repairs (not cosmetic improvements), electricity and wear and tear on office equipment.
Travel Claims
If you are working in the office, remember that business travel claims don’t include getting to the office and back to home every day. However there are specific instances when you can claim your business mileage:
- you receive a travel allowance which appears next to source code 3701 or 3702 on your IRP5
- you receive the use of a company car fringe benefit which appears next to source code 3802 or 3816 on your IRP5
- you earn commission (more than 50% of total remuneration must be derived from commission)
- you are self-employed, an independent contractor or freelancer
Retirement funds
Any contributions you make towards a retirement fund are tax deductible up to a limit of 27.5% of the greater of your taxable income or remuneration with a maximum of R350 000 per year. This limit relates to your total contributions towards any pension, provident or retirement annuity in a year.
Medical expenses
If you have a medical aid, you will receive a fixed monthly tax credit for each member on your policy. This is a flat rate per month and is not related to your taxable income, but is rather a direct deduction of your tax liability. This tax credit is only related to registered medical aids and it is important that you have your tax certificate from your medical aid scheme before you need to file your tax. You should also retain all your medical expenses that were not reimbursed by your medical aid as you may be eligible for an additional medical expenses tax credit – so keep track of all your medical expenses over and above your medical aid cover.
COVID-19 Corporate Tax Relief
In addition to the above tax reductions, it is important for businesses to remember that under SARS’s COVID-19 tax relief measures, companies can defer a portion of their provisional tax payments:
The Covid-19 tax relief measure allows the following:
- First provisional payment based on 15% of the total estimated tax liability
- Second provisional payment based on 65% of the total estimated liability
- Third provisional payment for remaining 35% (100% – 65%)
This special concession is for companies, which make provisional payments from 1 April 2020 to 31 March 2021.
Another tax relief/ reduction that businesses can consider is:
Donations to Solidarity Fund
This was a new relief announced on the 21st of April 2020. In normal circumstances, donations to registered Public Benefit Organisations are deductible up to 10% of a business’s taxable income. However this limit has been increased to 20% of taxable income.
Maximise your tax deductions with expert assistance
To find out more about what tax relief concessions are available to you and for expert assistance with your individual or company tax submissions, speak to the EA Group tax team today.