Filing season opens on the 1st July 2016 and it’s too late to do anything about this past tax year.
When you know before you complete the return what to expect, that means you are on top of your tax return. Tax planning should take full advantage of all options before the end of the tax year in February.
Completing the tax return then becomes a formality.
Here are some ideas to work on before February next year.
If your medical aid saving account runs out during the year, keep on sending the medical bills to your medical aid company. They tally the expenses for you on your tax certificate as not being paid by the scheme. This amount is claimable on your return after certain limits. This will save you keeping records as proof for SARS.
This year you can deduct up to 27,5% of the contributions made towards your retirement funds against your taxable earnings.
This is a huge opportunity to get more into your retirement savings at less cost. You effectively get back what ever your marginal tax percentage is.
This means that, if you pay 41% tax then you receive 41 cents for every rand you save. You can make a top up to the maximum limit before the end of February 2017.
Capital gains tax If you are planning to sell off an investment such as a unit trust or gold coins, then take full advantage of your exemption on capital gains tax by selling off your assets over different tax years.
You could sell before the end of February 2017 and then in March 2017, and this way the disposal of the assets gets a double deduction. The current inclusion rate on CGT is R40 000 per annum.
You should e-file your return before the 25th November 2016.
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Read more from Paul Roelofse at www.investforlife.co.za