The recently released South African Tax Statistics 2013, which is a joint publication of National Treasury and the South African Revenue Service, reveals that just 3.3 million taxpayers shoulder 99 per cent of the tax burden in this country.
If you are one of those whose heavy tax bill has left their wallet substantially lighter, you have options that won’t leave you running from the law like Al Capone.
Port Elizabeth based PWM Financial Management advises; “We certainly do not advocate tax evasion but there are some perfectly legal ways to avoid paying too much tax.”
With tax season a thing of the past, PWM suggests these four easy ways to pay less personal income tax in future:
- Medical aid contributions: SARS introduced the medical aid tax credit for the first time this year. Instead of deducting your contributions from your taxable income, as in previous years, you will now receive credits against your tax paid.
- Retirement annuity contributions: If you do not have a pension or provident fund, you can claim tax deductions on RA contributions of up to 15 per cent of your total non-retirement funding income.
- Donations to Public Benefit Organisations: You can claim tax deductions for donations of up to 10 per cent of your taxable income to a public benefit organisation. The organisation must however comply with the requirements set out in Section 18A of the Income Tax Act.
- Income protection policy premiums: If you become permanently disabled and cannot work in your field, an income protection policy will provide you with an income. Although the premiums currently qualify for a deduction, a new proposal, scheduled to take effect in March 2015, will bring this to an end. However, the good news is that all payouts will be tax-free.
For more strategies to save on personal income tax payments, contact PWM Financial Management consultants in Port Elizabeth