Tax Deductions to Be Aware Of

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Tax Deductions to Be Aware Of

As a business, you’d want to save money wherever you can. While many people are afraid of cutting their taxes, it’s a legal process, and there are great ways that you can use it without even touching the grey area of the law. Here’s how you can do so in South Africa without worrying about any penalties from the SARS.


Any losses that you incur are acceptable for carrying in the next fiscal year and can be set off against taxable income. The only condition is that the deductible expenses are more than income while the taxpayers engage in trade in the year.

Those taxpayers that are subject to income tax at a rate of 45% while making employment income are allowed to carry their losses from a secondary trade. There are certain conditions to this aspect, and it’s generally recommended to consult an expert about them.

Tax-Free Investment Accounts

The South African government has pushed people to save up money for the betterment of the economy since 2015, providing people with the opportunity to invest in tax-free investment accounts. You have a limit of R33,000 per year and a lifetime limit of R500,000.

Many business owners put varying amounts of their earnings in these accounts to bring down their overall taxable incomes. Essentially, you make the most of compounding while not paying dividends, gains tax, or any interest.


The SARS recognizes various non-profit organisations working in the country as Public Benefit Organisation (PBO). As long as you’re not paying more than 10% of your taxable income, you’re allowed to make a tax-free donation to these organisations. Many businesses avail these heavily to reduce some of their taxable income.

Secondly, it’s considered a great route for contributing to your CSR policy and generally doing well for the community. Consider going through a list of verified SARS-approved PBOs to ensure that you’re working with reliable services and are applicable for tax deductions.

Contributing to a Retirement Fund

Another great way to save up on taxable income is to save up money using retirement funds, pension, provident, or retirement annuity. You’re allowed to put in a total of R350,000 each year, or around 27.5% of the taxable income.

A closeup of a calculator

Do note you can’t use any of the amounts you’ve saved up in these accounts until you’re 55.

Home Office Expenses

According to SARS regulations, you’re allowed to claim tax deductions if you’re using one of the rooms from your personal living space for your trade. It needs to specifically be used for that purpose. There are conditions like performing more than 50% of your activities in that room for trade.

Working with a proper tax preparation service is your route to saving money more effectively in the long term. ANM Auditors offers services to a wide range of industries and businesses to help them become more efficient and to grow, providing business accounting services, tax preparation services, business payroll services, VAT accounting services, professional bookkeepers for hire, and company registration services in South Africa. Reach out to us right away so we can help your business flourish.

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