Planning is everything, as they say, and while it’s true of most things, it’s even truer when it comes to tax. Although it can be tempting now that financial year end is over to hide your head in the sand and not think of anything tax-related for the next ten months – please, don’t.
Preparing for the next tax season now could save you lots of money, not to mention stress. Here’s how:
1. Budget your savings too, not just your spending
Often savings is the orphaned stepchild in our budgets, left until last and only getting whatever scraps didn’t go to our other expenses. But having a goal of how much to save every month from the outset and putting it into a separate account at the beginning of the month makes way more sense. Even more effective is incentivising yourself with small, high-quality treats budgeted for if you stick to your savings goals.
2. Miles of mileage
Start keeping a detailed log of how much you’re driving for work now, rather than guessing in eleven months’ time. The benefits of this one are huge – did you know that some people spend up to ten percent of their monthly budget on petrol, and that more than half of that goes to work-related driving? Keeping your petrol station slips and a logbook can get you a decent chunk of that money back this time next year.
3. Get smart with donations
If you give regularly to a charity throughout the year, it might be worth finding out if the organisation is a public benefit one and if you could obtain a certificate from them stating that you donated this amount in this year. The reason for that is, with such a certificate, you can claim deductions of up to ten percent of your income on your next return. So, if you earn R100,000 in a year and donate up to R10,000 (but no more) then you can get a sizable deduction on your tax return based on this.
4. Think about fax-free investments
We all know that personal income tax and capital gains tax have become more and more onerous over the years – the more you earn, the more it seems as though you are penalised. If you’re looking to make your next investment with your hard-earned money and are not thrilled about giving up to forty-five percent of it to Sars, why not think about tax-free investments? The appeal is that any interest or returns made on these investments are not taxed – either under PIT (personal income tax) or capital gains tax. Set yourself up now so that, when next year’s return comes, you’ll be smiling. Some tax-free investments are far better than others in terms of growth, however, so do your research carefully.
5. Get a medical aid check-up
If you are the breadwinner for your family and have medical aid, it may be worth checking up on your medical aid. Ask your scheme provider what kind of tax deductions you can expect – especially if you have more than one dependent. Under some schemes, you can save thousands by receiving a ‘tax credit’ with some medical aids if you have a number of dependants on your medical aid.
Ultimately, tax filing season need not be a stressful event. It can actually be rather rewarding, if you prepare and plan beforehand. Why not start today?