28 February is a very important date for your finances as it marks the end of the financial year. All information up to this date will be included in your 2020/2021 tax return. This includes all tax deductions. Make sure you have made the most of those tax deductions in order to reduce your tax liability.
You can top up your retirement fund by investing up to 27.5% of your income, tax free (up to a maximum of R350 000). It is a great way to reduce your tax burden while securing your retirement.
If you haven’t already maxed out your annual R36 000 tax-free savings allowance, pay in a lump sum before the end of February to get your contributions up to this level. You are limited to how much you can contribute each year so you cannot just catch it up next year.
Write down your odometer reading if you claim business travel expenses. You also need to be keeping a log book which you will have to submit when you file your tax return later in the year.
File your expenses that you are able to claim as tax deductions. If you have been working from home due to COVID regulations, there may be additional expenses you can claim for your home office. If you are claiming medical expenses, ideally you should try put all medical expenses through your medical scheme (even if they do not pay), as it provides a single record for SARS.
If you have R100 000 or more to invest and are looking for some tax relief, consider investing in a Section 12J fund. This is a tax incentive by government to encourage investment into certain sectors. Any upfront investment is fully tax deductible, however, the investment must be held for at least five years and incurs capital gains tax on the full value on exit.
Finally, if you are planning on selling assets such as shares or unit trusts, by phasing the sale over February and March you spread the tax burden over two financial years and benefit from the R40 000 tax exemption per tax year.
Make sure you have your paperwork up to date. This takes away the stress of finding these documents when the time comes to file your tax return.