How to Maximise Your Tax Return in the New Financial Year

Caty Naude CFP®

 

As we enter a new tax year, proactive planning is key to maximising your tax return and ensuring compliance with SARS regulations. Instead of rushing at the last minute, taking strategic steps throughout the year can help you optimise your refund and reduce tax liabilities. Here’s how you can make the most of the new financial year:

 

Keep Track of Expenses

Maintaining organised records of deductible expenses, investments, medical costs, and business-related transactions is crucial. Using digital tools or apps can simplify record-keeping and ensure you don’t miss out on eligible deductions.

 

Maximise Tax-Deductible Contributions

One of the most effective ways to reduce your taxable income is by contributing to tax-deductible savings vehicles, such as:

• Retirement Funds: Contributions to pension funds, provident funds, and retirement annuities (RAs) can lower your taxable income. SARS allows deductions of up to 27.5% of your taxable earnings (capped at R350,000 per year).

• Tax-Free Savings Accounts (TFSAs): A TFSA allows you to invest up to R36,000 per year (with a lifetime limit of R500,000 contributions) without paying tax on the interest, dividends, or capital gains earned. This makes it a valuable tool for long-term, tax-efficient wealth growth. There is no tax deduction on the contributions, so it is normally more tax efficient to first use the maximum tax deductible contribution to retirement funds before contributing to Tax-Free Savings Accounts.

 

Claim Medical and Work-Related Deductions

• Medical Expenses: Medical aid contributions qualify for tax credits, and out-of-pocket medical expenses may be deductible depending on your age and medical expenses threshold.

• Work-from-Home Deductions: If you work remotely and have a dedicated home office that meets the SARS criteria, you may be able to claim expenses such as rent, utilities, and office supplies as deductions.

 

Leverage Donations and Capital Gains Planning

• Donations to Charity: Donations to qualifying Public Benefit Organisations (PBOs) are tax-deductible up to 10% of your taxable income, potentially reducing your tax liability. Make sure you receive a S18A tax certificate for your contributions.

• Capital Gains Tax (CGT) Management: If you plan to sell assets, consider spreading disposals across multiple tax years to minimise CGT exposure and utilize the annual exemption of R40,000.

 

File on Time and Seek Professional Advice

To avoid penalties, ensure you meet SARS filing deadlines and take full advantage of available deductions. Consulting a financial advisor can help you navigate tax-saving opportunities and align your financial strategy with your long-term goals.

By planning ahead and making informed financial decisions, you can optimise your tax return while building a stronger financial future. Contact Ascor Independent Wealth Managers CC to start your tax-efficient financial journey today!

 

Read more about Ascor® Tax Services

 

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