How South Africans can pay less tax without risking SARS penalties
South Africa has some of the highest tax rates in the world, but there are legal methods taxpayers can use to reduce their tax burden and retain more of their income.
With personal income tax rates reaching as high as 45% for individuals earning above R1.8 million, and with the country's tax-to-GDP ratio expected to approach 25% in the coming years, many South Africans are feeling the pressure.
However, in an interview with radio station Kaya 959, Roxanna Naidoo, Head of Global Strategy at Latita Africa, said there are other legal ways South Africans can use to pay less tax.
"I'm a very strong advocate for tax avoidance and how to ensure that you're optimising your tax incentives legally. And there are quite a few ways," Naidoo said.
Naidoo explained that many taxpayers miss out on important deductions simply because they don't fully understand what qualifies.
"So, the tax system actually allows you to reduce your liability. And there are a few mechanisms there, but taxpayers aren't aware of that," she said.
"We know the most common one is your retirement annuity contributions. They are deductible up to a certain limit. Then the second common one, again, is your medical contributions, but also out-of-pocket medical expenses. People forget about those".
She also stressed that out-of-pocket medical expenses can also qualify for tax credits, and business-related travel costs may be deductible.
"That can also qualify for medical tax credits. Then, if you earn commission or you travel for work, you may also qualify to deduct business travel expenses. That's where keeping those receipts comes in as very important, keeping all of those records"
Naidoo also warned taxpayers to be cautious with SARS auto-assessments, which are pre-filled tax returns based on third-party data like employer records and medical aid contributions.
"If you accept the assessment without checking, you risk under-declaring income or even losing out on those deductions that you should be getting.
"Also, if SARS audits you later, and they do this sometimes up to five years down the line, they'll ask you for that documentation. And if you don't have it, they can then reverse deductions and charge penalties and interest. So, always check your assessment before accepting it and keep those records of everything, just in case"
IOL News
[email protected] Get your news on the go, click here to join the IOL News WhatsApp channel
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
2 hours ago
- IOL News
Count Me in Movement calls for reform of spaza shop regulations to support local businesses
The Count Me In Movement has decried the systemic exclusion of South African citizens and township business owners from accessing crucial government support as the nation grapples with a burgeoning informal retail sector. . Image: Independent Newspapers Archives The Count Me in Movement has taken a firm stand against the "systematic exclusion" of South Africans within the current Spaza Shop regulatory framework, calling in the process for a significant overhaul of South Africa's spaza shop regulatory system. The movement said the current system excludes township business owners from accessing crucial government support while the nation continues to grapple with a burgeoning informal retail sector. This comes after the recent government announcement of the R500 million Spaza Shop Support Fund (SSSF), which seeks to empower eligible South African spaza shop owners in both townships and rural areas, offering them a lifeline to improve, expand, and sustain their businesses. However, the Count Me in Movement argues that many local entrepreneurs remain locked out of this initiative, primarily due to excessive compliance burdens, fragmented registration processes, and pervasive barriers within the licensing system. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ In a statement released on Friday, the movement appealed directly to Small Business Minister Stella Ndabeni-Abrahams, urging her to address these pressing challenges. They disclosed that while spaza shops play a pivotal role in township economies, a lack of streamlined and accessible compliance requirements often deters local operators from benefiting from government initiatives. "Despite playing a critical role in township economies, many of these businesses remain locked out of the Spaza Shop Support fund due to excessive compliance. burdens, fragmented registration requirements, and systematic barriers in the licensing process," it said. The movement said unregistered spaza shop owners, most of whom are undocumented foreigners have made the process very difficult for local spaza shop operators. "Adding to the challenge is the rapid proliferation of unregistered spaza shops, operated by undocumented foreign nationals, who are not subjected to the same inspections or regulatory scrutiny--creating an uneven and unfair playing field for local entrepreneurs. "Our local entrepreneurs are being set up to fail by a system that expects full compliance with scattered, expensive and inaccessible requirements. The current model disproportionately impacts South African spaza shop owners who lack the digital access, financial resources, or administrative support required to navigate complex state systems," the movement added.
The Star
4 hours ago
- The Star
SASKO upgrades 1 000 playgrounds in tribute to Mandela Month
In a powerful tribute to Mandela Month, SASKO has transformed playtime for thousands of children by upgrading 1 000 playgrounds at early childhood development centres and primary schools across South Africa, bringing joy, safety, and hope to communities nationwide. To celebrate the achievement of reaching 1,000 upgraded playgrounds, SASKO held a Mandela Day event at Ikaneng Combined School in Diepkloof, Soweto, on July 25. The school is one of many to benefit from the Siyasizana Play Better initiative. As part of the celebration, SASKO unveiled a special 1,000-slice loaf, a symbolic nod to both the milestone and Nelson Mandela's enduring vision for a better South Africa. The loaf was used to prepare sandwiches for the children of Ikaneng. The act of care extended to a local NGO that supports feeding initiatives for learners in the community, ensuring that the spirit of Mandela Day is not only celebrated but lived out. Launched in 2023, SASKO's Siyasizana Play Better initiative aims to bridge the gap in access to safe and quality play spaces at early childhood development centres and schools. Rooted in a spirit of care, the programme has invested over R10 million and relied on public participation, where South Africans nominated schools by purchasing SASKO bread. As a result, previously overlooked communities across Limpopo, Khayelitsha, Soweto, and Gqeberha now enjoy vibrant, inclusive play areas that spark creativity and joy. According to the South African Early Childhood Review, over 60% of young children in South Africa do not have access to safe, age-appropriate play facilities. Vilosha Soni, Chief Marketing Officer at PepsiCo South Africa, said SASKO is committed to ensuring that all children have the chance to enjoy safe play, feel valued, and experience a sense of belonging. 'SASKO believes every child deserves the right to play, to be safe, and to feel like they matter. These playgrounds represent more than structures; they are symbols of dignity and hope.' She further said the initiative reflects what it means to put care into action, highlighting how lasting change is possible when consumers, communities, and businesses work together. SASKO partnered with Buco, which helped bring a positive impact to schools by providing building materials for our playground structures. Lesego Moagi, Group Marketing Executive at Buco, said that as a brand firmly rooted in local communities, Buco recognises that meaningful change comes from creating safe, supportive spaces where children can thrive. He added that Buco has witnessed firsthand how the lack of safe and functional infrastructure continues to hinder learners' growth and potential. 'We've seen how the absence of safe, functional infrastructure continues to hold learners back, particularly in the foundation years where care, safety, and stimulation matter most. Contributing to the Siyasizana playgrounds has been aligned with our broader commitment to supporting education as a driver of social and economic development,' said Moagi. SASKO aims to reach 5 million children by 2030, working to make play a fundamental right rather than a privilege. The brand intends to strengthen partnerships with NGOs and government bodies to expand its impact and bring meaningful change to underserved communities. The Star [email protected]
IOL News
6 hours ago
- IOL News
First-Time Buyer in SA? Why a 10% deposit can save you over R160K
It pays to conduct a detailed analysis of your spending habits as a starting point. Image: RON AI Simon* was no stranger to second-guessing himself, and at times, he really wondered if he was making progress in life. As a junior account manager at a marketing agency, he was making a reasonably good salary for a 28-year-old. Not thriving, not rolling in it, but theoretically skirting within the boundaries of middle-class life. But often it just didn't feel like it. He lived in shared accommodation with two other people. When his girlfriend slept over on weekends, she complained about having to share a bathroom with other housemates. She also wasn't a fan of his silver 12-year-old Toyota Yaris with a massive gash across the back bumper. Many of his friends rented their own townhouses, often impeccably furnished, and with the obligatory big screen TV for Saturday's rugby game. One of his friends, at a similar earning level, bought himself a brand new Polo GTI, right out the box. But when Simon looked at his investment account balance, a gentle smile lit up his face. Living below his means, and strictly managing his cash flow, was allowing him to save between 30% and 40% of his net income, depending on each month's unexpected expenses. He'd been saving at a significant level since the age of 26, and not too long after his 30th birthday, Simon bought his first house. He did this with a 30% deposit, drastically reducing his interest rate and setting himself up to be debt-free sooner than expected. He also traded up to a partner who didn't judge his trusty old ride. There are numerous examples of South Africans who made the necessary sacrifices to save up for their home loan deposit. Although many first-time home owners opt for a zero deposit option, this will lead to significantly higher interest rate payments over the long term. Let's look at a simple example. If you buy a R1 million home with a 100% deposit, at 11.75% interest over 20 years, your monthly instalment will be R10,837, and the total interest paid over the term will amount to R1,6 million, according to FNB. But put down a 10% deposit of R100,000 and you're looking at a lower monthly payment of R9,753, and the total interest amount is reduced to R1.44 million. That's a saving of around R160,000 in interest over the 20-year period, and you stand to save far more than that by putting down a 20% or 30% deposit. 'Putting down a deposit signals that you're financially ready. It reduces the loan amount you need, lowers your monthly repayments, and increases your chance of approval. It also shows that you've built the habits needed to manage your long-term financial commitments,' says Sfiso Mahlangu, structured lending product manager at FNB Home. But how do you save for that all-important deposit? Farzana Botha, senior communications manager at Sanlam Risk and Savings, said she and her husband made several sacrifices while saving for their first home deposit. These included downsizing their car to reduce repayments and selling household items that were no longer needed, while her husband also took on side jobs to generate additional income. 'These sacrifices were tough but worthwhile – having a deposit gave us access to better finance options and made our dream of homeownership possible,' Botha enthused. She says living below your means is one of the smartest ways to reach your dream of owning a home faster. 'It starts with being intentional about how you spend and save. Work out how much you'll need for a deposit and set a monthly savings target. Automate that amount as soon as you're paid so it becomes a priority rather than an afterthought.' She recommends tracking every cent of your income and expenses, and making lifestyle tweaks where possible. This could mean cutting back on things like entertainment, takeaways and subscriptions. Even small changes like cooking at home and sharing streaming services can free up hundreds each month, she adds. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ It's well worth saving up for a bigger deposit if you can. Image: RON AI Luke Davis-Ferguson, financial planner at Fiscal Private Client Services, advises South Africans to resist the urge to upgrade their lifestyle after receiving a raise or bonus. 'Consider moving in with family, getting a roommate or relocating to a more affordable area temporarily. Selling unused items can also give your savings a quick boost.' His firm recently helped a couple create a monthly surplus of nearly R5,000, simply by reducing discretionary spending on eating out, subscriptions, and impulse purchases. Be aggressive with your savings strategy Luke Davis-Ferguson says the first step is understanding exactly where your money is going. He recommends downloading bank statements from the past three to six months and reviewing every line item. Tools such as Discovery Bank's Vitality Money Financial Analyser or FNB's Money Savings Goals can be used to create a detailed and customised monthly budget. Davis-Ferguson says the 50/30/20 rule is generally used as a starting point for budgeting. This means 50% for needs such as rent, groceries, transport and medical aid, 30% for wants like entertainment and eating out and 20% for savings and debt repayment. However, if your goal is to save for a deposit, this ratio needs adjusting. Consider trimming wants to 10% and boosting savings to 40%. Ester Ochse, product head at FNB Integrated Advice, recommends a 'pay yourself first' approach to savings, in which you automate your banking and move a set percentage of your income into a separate savings account. Ester Ochse, product head at FNB Integrated Advice. Image: Supplied 'This removes the guesswork and the temptation to use what's meant for your future on short-term wants,' Ochse said. She recommends the 80:20 rule, with at least 20% of one's income being directed to savings, or more if possible. Furthermore, it's vital that you set a clear savings goal with a clear timeline, says Tando Ngibe, senior manager at Budget Insurance. 'Break it down monthly so it feels achievable. Then automate your savings through your bank so it becomes a habit, not a decision. 'Remember, living below your means isn't about depriving yourself. It's about being intentional with your money so you can build the future you want,' Ngibe added. Tackle your debt first Before ramping up your savings, it's crucial to tackle any high-interest debt, especially from credit cards, clothing accounts or personal loans, Davis-Ferguson says. 'These debts often carry interest rates that far exceed what you could earn in a savings account, meaning they erode your financial progress,' he adds. 'Start by listing all your debts, including balances, minimum payments, and interest rates. Focus on paying off the highest-interest debts first (the avalanche method), or if you need quick wins to stay motivated, start with the smallest balances (the snowball method). 'Once you have cleared your high-interest debt, redirect those monthly repayments into your savings,' Davis-Ferguson concludes. It's important to estimate what your monthly costs will be after purchasing your first home, Discovery Bank's head of technical marketing, David Leibowitz advises. This means adding up the estimates of your monthly home loan, as well as municipal rates, utilities, levies (if you're in a complex), home insurance and future property repairs and maintenance. Bond registration and property transfer costs also need to be budgeted for in advance. Why you should put extra money into your bond If you've budgeted correctly and there is still a bit of money left over at the end of each month, it makes a great deal of sense to put this into your bond. Simon, who we mentioned earlier, is already looking forward to paying off his bond sooner and saving a great deal on interest by employing this trick. But how much can realistically be saved? According to FNB, paying an additional R500 into your 20-year bond on a R1 million property, using the aforementioned example, will save you R335,000 in interest and shorten your loan period by three years. Whichever strategy you follow, it is important to approach your savings with a goals-based approach, says Nicola Langridge, wealth manager at Private Client Holdings. 'Starting a new exercise regime has always been hard for me when I am not clear on what the goal is. I am far more committed when I have entered a 21km race or booked a hiking trip that requires preparation and has a clear deadline. Saving for your financial future follows the same principle,' Langridge says. But life does not happen in a straight line, so regular reviews and adjustments are essential as circumstances evolve, she adds. IOL
