I think whenever you want to ruin a conversation you just talk about Tax.
You may laugh, but it’s true. I feel sure when I say most people dread Tax.
In the beginning of our business taxes was definitely not our strong suit. We learned the hard way by losing a lot of money by paying too much for our taxes and through our experience we found ways to save massive amounts of money for your business.
But maybe, just maybe, we can help you out. We know it’s never fun to do your taxes, but what if there is a way you could save money in the process.
So, here are 5 tips to pay less tax. Not all of them may apply to your situation, but I’m sure at least 1 will help you save.
- Contribute towards a retirement fund
When you contribute towards a retirement fund, tax is deductible up to a limit of 27,5% of the greater of your taxable income
This limit applies to the total contributions you make to any pension, provident, or retirement annuity (RA) fund during the year.
To find your pension and provident fund contributions you can see these on your monthly payslip.
- Open up a Tax-Free Savings Account
There is a type of savings account where your money is in a combination of financial products such as unit trusts, bank savings accounts, fixed deposits, bonds, etc.
The cool thing about this is that all returns like the interest, dividends, and capital gains earned, will be tax-free in your hands.
- Donate to a SARS registered charity
A Public Benefit Organisation (PBO) is a non-profit organization, that is approved by SARS to not pay any tax in South Africa on the donations it receives.
Any contribution you make is tax-deductible up to a limit of 10% of your taxable income.
You can find a list of SARS approved PBOs on the SARS website here.
What a great way to save money and do a good deed!
- Join a Medical Aid Scheme
If you contribute to a Medical Aid this tax year you will receive a fixed monthly tax credit of R310 for you as the primary member, a further R310 for your first dependent and R209 for each of your additional dependents. SARS calls this rebate the Medical Schemes Fees Tax Credit – it is a flat rate per month.
- Keep a logbook if you receive a travel allowance
A travel allowance is a taxable fringe benefit, this means that it will show on your taxable income.
If you keep a logbook to record your business mileage, you can also claim a travel deduction that may reduce tax.
I really hope these tips help you. This is why I have an accounting firm because I believe in helping small business owners save money wherever they can and use their money wisely.
We do offer personal consulting for our clients because we believe in putting our brains together and coming up with a great solution is the perfect opportunity for you to build a stronger business.
Come back next week for more tips!
Hope you have a great week,