Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts from AJM Tax share their tips and explanations on tax issues. Learn everything you need to know about tax, from deductions you never knew about to retirement savings and capital gains. The first Tuesday of every month is Tax Tuesday.
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Tax Tuesday: Buying property
Considering the low interest rates currently available, you may be more tempted to either buy your first home or build up a property investment portfolio. In debating which decision to make, you should always keep the potential tax consequences in mind. We explain the ABCs and T&Cs of Capital Gains Tax on residential property.
Jun 1, 2021
Tax Tuesday: Tax obligations for global citizens
The global pandemic has brought about a rapid change in the way we work. Many South Africans have taken this opportunity to keep their South African employment or businesses, whilst relocating to other parts of the world. If this is your setup, you should be mindful of how this affects your financial and tax position. ...
May 4, 2021
Video: Budget review
Bobby Wessels from AJM Tax gives us his highlights (and missing points) from the 2021 budget. He also answered questions on; CGT three-year rule Home office deductions Offshore dividends S12J Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts share their tips and ...
Mar 2, 2021
Tax Tuesday: Budget speech summary
Minister Tito Mboweni delivered his annual budget speech on 24 February 2021. In the year following the outbreak of the Covid-19 pandemic, many expected the individual tax burden to increase to make up for increased government spending and lower year-on-year tax collections. However, in an effort to stimulate spending, government increased tax brackets above inflation ...
Mar 2, 2021
Tax Tuesday: Capital loss, selling crypto and forex gains
In this blog post, we answer three questions posted on the Fat Wallet Facebook community page. Q: If you have a capital loss, do you need to declare it in your tax return? Or is it optional? When a capital loss arises for a year of assessment, it is not optional for a taxpayer to ...
Feb 2, 2021
Tax Tuesday: Tax on total return ETFs
PART I: TAX BASICS When a South African company declares dividends to a South African shareholder, the dividends are generally exempt from income tax. Instead, the dividends are subject dividends tax. Dividends Tax is a withholding tax (meaning it’s paid directly to SARS on the investor’s behalf) and is levied at 20% of dividends received. ...
Dec 1, 2020
Tax Tuesday: Your tax check-list
When it comes to filing tax returns, preparation is key. While tax season is only for a few months in the year, there are steps you can take throughout the year to make your tax submission as smooth as possible. So says De Wet de Villiers of AJM Tax in this episode of The Fat Wallet ...
Nov 3, 2020
Tax Tuesday: Retirement need-to-know
2020 saw us having numerous conversations with clients heading into retirement (planned and unplanned, forced early retirement). To keep up with this theme, this blog will look at the tax consequences associated with retirement and key opportunities to consider when planning your retirement. Let’s first consider the following basic rules that apply to the different ...
Sep 29, 2020
Tax Tuesday: Your effective tax rate
Being in the middle of the 2020 tax filing season and halfway through the 2021 tax year, we wanted to clarify how the SARS tax brackets work and what your effective tax rate is for each. South Africa applies a sliding scale to determine the relevant tax rate. This isn’t the case in some other ...
Sep 1, 2020
Tax Tuesday: Tax-efficient emergency funds
When saving towards your emergency fund, you should also consider the most tax-efficient structure. The options you can save in are: your personal capacity; your company; or your trust. The income generated from your emergency fund determines how you will be taxed. This income could be capital gains (when you sell shares to cover emergencies), ...
Aug 4, 2020
Tax Tuesday: Medical tax credits
Taxpayers are entitled to two medical credits: A credit on contributions made to your medical aid; and A credit on additional medical expenses you paid that weren't covered by your medical aid. This is called qualifying out-of-pocket medical expenses. Medical Scheme Fees Tax Credit (MTC) If you're a medical aid member, the South African Revenue ...
Jul 7, 2020
Tax Tuesday: Prepare for filing season!
Filing season is upon us! COVID-19 has placed pressure on the state coffers. SARS will be coming out of the gates guns blazing in an attempt to recover as much lost revenue as possible. This doesn’t mean SARS will unjustifiably increase your tax liability. However, SARS will leave no stone unturned in the pursuit of ...
Jun 2, 2020
Tax Tuesday: Tax deductions and investment expenses
In The Fat Wallet podcast, Lockdown Money Crisis, Celma wanted to understand why the administration fees on her investments aren't tax-deductible. Generally, to assess whether an expense is tax deductible, it needs to be determined whether the expense: Was incurred for the purposes of trade (not for purposes of trading shares, but "trade" as defined for ...
May 5, 2020
Tax Tuesday: COVID-19 tax relief explained
Simon did a quick interview with Pieter Janse van Rensburg & De Wet de Villiers from AJM Tax on this and the video is at the bottom of the post. National Treasury has released a draft explanatory memorandum on 29 March to further clarify the economic relief measures announced by President Ramaphosa ahead of the ...
Apr 7, 2020
Tax Tuesday: Budget 2020
This was one of the most taxpayer-friendly budgets delivered in ages. It seems as if government—especially if you consider the rules around exchange control—are saying, “Please trust us enough to keep your money in South Africa, but if you don’t, you are free to move it offshore if you please.” Here’s a list of the ...
Mar 3, 2020
Tax Tuesday: Tax on home loans
To calculate the tax consequences linked to home loans, we first need to differentiate between your primary residence (i.e. property you live in) and a buy-to-let property. Your primary residence You’re generally not allowed any tax deductions for the interest portion of the home loan repayment. If, however, you have a home office you could ...
Feb 4, 2020
Tax Tuesday: Tax brackets
A common complaint amongst South Africa’s tax-paying citizens is our high tax rate when compared to the rest of the world. We aren’t saying this is not true (South Africa rated as the country with the 12th highest personal income tax rate in 2018), but we want to clarify how the SARS tax brackets work ...
Dec 3, 2019
Tax Tuesday: RA allowance and capital gains tax
A question that we’ve come across several times—and one that also featured in The Fat Wallet Show —asks whether capital gains are included in the 27.5% tax deduction calculation. In other words, whether the capital gains you earn in addition to your monthly salary is added to your taxable monthly income. The short answer is ...
Nov 5, 2019
Tax Tuesday: Donations from non-residents
In Episode 166 of The Fat Wallet Show, Ben sent the below question about donations tax on non-residents. Our Tax Elves were intrigued, and decided to tackle Ben's question head-on. Question: My parents stay in France (not near Champagne unfortunately) and they are UK citizens. They have a unit in a complex in SA that ...
Oct 29, 2019
Tax Tuesday: Education exemptions
A lesser-known tax exemption given to individuals lives within the realm of education. This exemption includes bursaries and scholarships granted to an employee or a relative of the employee. A relative, in this regard, is a spouse or person related to the employee or their spouse within the third degree. So, what are the requirements ...
Oct 1, 2019
Tax Tuesday: Ring-fencing losses
Let’s start this conversation by looking at what it means to ring-fence a tax loss. A tax loss from one source of income (like rental property) is ring-fenced if SARS does not allow you to offset that tax loss against income from another source of income (like your salary). The two sources of income are ...
Sep 3, 2019
Tax Tuesday: Share incentive schemes
Many companies (listed and non-listed) offer employee share incentive schemes as a form of further remuneration. It’s can also be utilised as an employee retention tool. This month we want to unpack* the complicated tax rules governing share incentive schemes to help employees better understand the potential tax consequences. This post was inspired by a ...
Aug 6, 2019
Tax Tuesday: Fringe benefit tax on RAs
Following a discussion on the Facebook Fat Wallet Community, we decided to dedicate this month’s blog to an example of taxable fringe benefits (aka perks tax). J is under 65 and unmarried. He earns a gross monthly cash salary of R20,000. His company pays R500 per month for his mobile phone and contributes to his ...
Jul 2, 2019
Tax Tuesday: TFSA 101
Tax-free savings accounts (TFSAs) were introduced in March 2015 as an incentive to encourage South African households to save for retirement. TFSAs allow you to invest in various investment products, most notably ETFs. The tax savings on these accounts will drastically increase the amount you have available at the end of your investment period, which ...
Jun 4, 2019
Tax Tuesday: Tax Clearance Certificates
A Tax Clearance Certificate (TCC) may be required for various purposes, such as: Moving funds offshore as part of your Foreign Investment Allowance; Compliance requirements such as tenders or good standing; Sitting on a board of directors of certain companies; or Tax emigration. Each purpose requires a different type of TCC. The ordinary “good standing” ...
May 7, 2019
Tax Tuesday: Emigration III – Expat tax
In our previous two blogs, we looked at the different types of residency and explored the exchange control consequences of leaving South Africa. In our final blog on emigration, we will look at the income tax consequences of ceasing to be a South African tax resident. It’s worth noting that the much-feared and widely publicised ...
Apr 2, 2019
Tax Tuesday: Emigration II – Exchange control
In Emigration Part One, we looked at the different types of residency. We also highlighted that home affairs residency (citizenship, passports, visas, permits) for exchange control (excon) purposes and residency for income tax purposes are not the same thing. In this blog, we explore the excon consequences of leaving South Africa and the practicalities involved. ...
Mar 5, 2019
Tax Tuesday: Emigration – Part One
The financial and tax implications of emigration is often discussed. In the first of our three-part series on emigration, we’ll look at the concept of "residence", as most of the South African income tax and exchange control consequences (both pre- and post-emigration) is determined by residency. There are essentially three concepts of residence: Home affairs ...
Feb 5, 2019
Tax Tuesday: Base cost methods for capital gains
A while ago, we discussed the basics of capital gains tax (CGT). Most of us contribute to our investment portfolios over time, which means we buy at different prices. In this article we help you figure out the best methods to calculate the base cost of your investment over time. Remember, when calculating CGT, ‘base ...
Dec 4, 2018
Tax Tuesday: Tax deductions on your home office
The deduction of home office expenses is a grey area in tax. This is partly because it’s regulated by several income tax act provisions that are interpreted differently by the parties involved – with SARS usually stricter in its interpretation. It’s also the taxpayer’s responsibility to prove to or convince SARS that the expenses are ...
Nov 6, 2018
Tax Tuesday: Provisional tax
Provisional tax exists to secure regular cash flow for government throughout the year, similar to the PAYE system. Where PAYE applies to remuneration, provisional tax applies to non-salary type income. As with PAYE, provisional tax doesn’t operate as a separate tax, but rather as the prepayment of a yet to be determined income tax liability. ...
Oct 2, 2018
Tax Tuesday: Medical aid tax deductions
In this blog, we dig a little deeper into the tax realm of medical aids and expenses. As a taxpayer, you’re essentially entitled to two medical tax credits: 1. A credit on contributions made to your medical aid, and 2. A credit on additional medical expenses you paid that weren’t covered by your medical aid. ...
Sep 4, 2018
Tax Tuesday: Tax and retirement
In this blog we’ll look at what it means to be a taxpayer once retired. Before we start, it's important to keep in mind that a retirement annuity (RA), pension or provident fund may usually only be accessed at a certain age. If you’re planning an early retirement, it would be advisable to have funds ...
Aug 7, 2018
Tax Tuesday: The most tax efficient entities
Within the context of tax, an individual, a company or a trust can own property and earn income. This income could be trading profits, capital gains, dividends, etc. Holding assets in one’s own name is, obviously, the simplest and most cost-effective of these three entity types. That being said, the tax benefits linked to a ...
Jul 3, 2018
Tax Tuesday: Property and tax
Whether you’re looking to buy a property to make it your home or to let, it’s important to understand the relevant tax rules as it can impact your investment returns. In this month’s blog, we’re taking a closer look at those rules to empower the property moguls amongst us. For the purpose of this blog, ...
May 29, 2018
Tax Tuesday: Foreign dividends
Last month’s blog touched on how dividends tax is applied when a local company declares dividends. In this month’s blog, we’ll look at the tax implications when a foreign company declares dividends. Dividends declared by foreign companies are only subject to dividends tax in South Africa if the foreign company is also listed on the ...
May 1, 2018
Tax Tuesday: The lowdown on dividends tax
Just because you don’t pay income tax on dividends, doesn’t mean they are tax-free. South African dividends carry dividends tax. Dividends tax is a withholding tax. This means the company declaring the dividend never pays the taxable portion to shareholders - it’s paid directly to SARS on the investor’s behalf. Dividends tax is levied at ...
Apr 3, 2018
Tax Tuesday: Capital Gains 101
To best explain how capital gains tax (CGT) is calculated, we’ll detail each part of a single transaction. When calculating CGT, ‘base cost’ and ‘proceeds’ are important. Base cost refers to the amount you paid for the shares. Proceeds is the amount you receive for selling your shares. In our example, you bought 250 shares ...
Mar 6, 2018
Tax Tuesday: Tips for a stress-free tax year
With the new tax year kicking off on 1 March 2018, we've created a list of important things to keep in mind when planning your tax returns. Watch the budget speech The first item on your to-do list should be ticked off before the tax year even starts. Tune in to the annual national budget ...
Feb 6, 2018