Doing good, feeling great!
No, this is not some kind of “wellness programme” advertisement, this time, we are talking about tax.
28 February 2018 is the end of the tax year for individuals and many other entities. This means that if you want to structure your tax affairs efficiently, you have about two weeks left to do so.
Although there are a number of items to consider, I want to bring two potential avenues under your attention that can provide you with tax deductions.
The first is contributions to retirement annuity funds. Each individual can make an annual contribution for the lower of 27.5% of their annual taxable income or R350 000 to a qualifying retirement annuity fund. The advantage of this is that it provides a pre-tax method of saving for retirement, the disadvantage is that the funds contributed will not be available before the age of 55 without attracting additional taxes. Any contributions contemplated, needs to be made before end of February in order to be included in the 2018 tax year.
The second, and this is where the “Doing good, feeling great!” originates from, is that you can make a donation to a registered public benefit organisation (PBO). It is important that the organisation has an NPO number and is specifically authorised to issue receipts under the requirements of section 18A of the Income Tax Act, commonly referred to as Section 18A receipts. This is typically orphanages or charity organisations which have registered with SARS for this purpose. These donations are deductible from your taxable income, up to 10% of your taxable income. Once again, if you want this to be taken into account for your 2018 tax year, the donation needs to be made before 28 February and the receipt also dated 28 February or earlier. This enables you to make a charitable donation AND receive a tax deduction, something that always makes me smile!
There are many other tax structuring options available, these are however the typical “low hanging fruit” to consider. If you require any assistance as to how these will fit into your specific circumstances, please do not hesitate to contact us.
Please note, this is not a complete technical and legislative analysis, the aim is to bring these avenues or options under your attention and initiate discussions as to how this will tie in with your specific circumstances. There are no “one size fits all” solutions and each entity or individual’s specific circumstances needs to be taken into consideration.
Also remember that if you are a provisional tax payer, your second provisional tax return needs to be submitted and paid on or before 28 February. If you decide to utilise the avenues discussed above, the amount of your possible deduction could have an impact on your estimate of provisional tax and potentially lower the amount payable.
Contact us at firstname.lastname@example.org or 076 881 0441 for any assistance or further information.