From Tax Stress to Tax Success
Planning Tips for 2026
By Dylan Rodrigues
With the 2025 tax year behind us and the 2026 tax year now underway, it is the perfect time to put a solid tax strategy in place. Proper tax planning ensures you take advantage of available deductions, exemptions, and investment benefits while staying compliant with SARS regulations. Here are some practical tax planning tips for the year ahead.
-
Maximise your Retirement Contributions
Contributing to a retirement annuity (RA) or employer pension/provident fund is one of the most tax-efficient ways to save for the future. SARS allows deductions of up to 27.5% of your taxable income (capped at R350,000 per year) for retirement contributions. Consider making contributions regularly throughout the year. This not only improves cash flow management, but also encourages a disciplined savings habit.
-
Use Your Tax-Free Investment Allowance
South Africans can invest up to R36,000 per tax year (with a lifetime limit of R500,000) in a Tax-Free Investment account. The returns, including interest, dividends, and capital gains, are completely tax-free. If you have not used your full allowance, consider making contributions early in the tax year to maximise potential growth. It is also important to ensure you do not exceed the R36,000 limit in a given tax year as SARS will apply a penalty amounting to 40% of the excess amount.
-
Claim Medical Aid and Other Deductions
Medical aid contributions qualify for tax credits, reducing your tax liability. Additional out-of-pocket medical expenses may also be deductible if they exceed a certain threshold relative to your taxable income. Keep an eye out and stay up to date with any changes made for the 2026 tax year.
-
Keep Track of Allowable Business Expenses
If you are a freelancer, contractor, or run your own business, be diligent about tracking deductible business expenses. Home office expenses, vehicle costs (if used for business), and work-related expenses can reduce your taxable income. Ensure you keep proper records and supporting documents for SARS audits.
-
Reassess Your Capital Gains Strategy
The Capital Gains Tax (CGT) inclusion rate is 40% for individuals, meaning you will pay tax on 40% of any capital gains above the annual exemption (currently R40,000). If a capital gain is well over the R40,000 exemption, consider spreading this across multiple years to remain within the exemption threshold.
-
Plan for Provisional Tax Payments
If you earn income outside of a regular salary paid by an employer (such as rental income, interest income or self-employment earnings), you may need to file provisional tax returns in August 2025 and February 2026 for the 2026 tax year. Make provision for these payments well in advance to avoid any cash flow issues on these dates.
-
Ensure Compliance and Avoid Penalties
SARS is becoming increasingly strict on compliance, with penalties for late submissions and underreporting of income. Stay on top of deadlines, submit accurate tax returns, and seek professional tax advice if needed to ensure you remain compliant.
Final Thoughts
Smart tax planning is not just about minimising tax – it is about making strategic financial decisions that align with your long-term goals. By implementing these tax-efficient strategies early in the 2026 tax year, you can optimise your financial position and reduce unnecessary tax burdens. If you are unsure about the best approach for your circumstances, consulting a tax professional can provide valuable guidance. Start planning now and take control of your tax affairs for a smoother, more efficient year ahead!
Read more about Ascor® Tax Services
Related topics:
https://ascor.co.za/common-tax-mistakes-and-how-to-avoid-them/
https://ascor.co.za/year-end-tax-tips-_-the-season-of-giving/
https://ascor.co.za/retirement-annuities-and-tax-free-savings-accounts-what-is-all-the-fuss-about/
https://ascor.co.za/tax-season-is-here-how-does-it-work/
https://ascor.co.za/the-tax-implications-on-your-retirement-should-you-move-abroad/
https://ascor.co.za/structuring-a-tax-efficient-retirement-and-savings-plan
Please follow and like us:
