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How to outflank the taxman at the eleventh hour
It's not too late to take advantage of a range of (perfectly legal) measures to save on your tax bill, writes LEIGH ROBERTS
THERE are only five days left to the end of the tax year - but that's time enough to make some last- minute savings. While the best time to make your tax-saving plans is the start of the year, there are some measures you can still take to pay less tax. These all involve maximising the allowed tax deductions and exemptions. The measures listed here largely relate to employees (self-employed people and commission-earning employees are fortunate to have access to a broader range of relief measures.) If you usually use actual costs in determining your business travel expenses, now's the time to replace tyres or take your car in for a service. The taxman has tightened up on the deductions granted to married couples. Each spouse can claim for his/her own medical bills, but because of the way this provision is structured there is more chance of getting a tax deduction if one spouse claims for all the bills. The general rule is that the spouse who physically pays the family's medical bills gets the tax deduction. Accordingly, it will be difficult for, say, the husband to claim the wife's medical fund contributions where these were directly deducted from her salary. As a tax planning point for working married couples, it makes sense for the family's bills to be claimed by the spouse who can make the biggest tax saving (calculated after taking into account age, income and the amount of medical costs). Remember, if you're on a non-contributory medical aid fund (that's where your employer pays your contributions), you cannot claim a deduction for these contributions. There is a tax break if you or a member of your family, including step-children, are physically or mentally handicapped (in terms of the taxman's stated definitions). In this instance, you can deduct the family's medical bills once the total exceeds R500. However, you are allowed to deduct the expenses incurred in maintaining this property as well as the interest paid on bond finance. While you can increase these expenses to a reasonable limit, the taxman will not allow expenses to exceed income. Each year, individual taxpayers can donate R25 000 of their assets to any individual without attracting donations tax. Donations tax is a separate tax levied at 15% on the donated assets. The annual exemption is useful to wealthier, older spouses as part of their overall estate planning strategies. The exemption applies to each spouse, so a married couple can give away R50 000 a year to their heirs. However, there are instances when you should ask for a tax assessment: to claim a deduction for your large medical bills, and for your retirement annuity and/or pension fund contributions where your employer excluded the latter two amounts when he calculated your monthly income tax payment. To save you the hassle of submitting a return next year, show your employer proof of payment of these contributions and ask him to make the deduction when calculating your monthly tax payment in future.
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