Many of you reading this may have just completed a tax return yourself or had your accountant complete it for you. Either way, you probably found that there was definitely still “Eish” in tax-eish-tion when you discovered how much tax you needed to pay to SARS. Sure, you claimed for certain expenses which reduced your tax, but you were still left with a large amount to pay in. Leaving you fearing the next time tax season rolls around. Do you know it doesn’t have to be like this? That there are two simple words that will put you at ease? What are they? Tax Planning.
Bottom line, tax planning is where you are going to save real money. Each and every business investment or transaction that you make, needs to be evaluated in terms of its tax implications. This is where a knowledgeable tax consultant will prove invaluable. They will guide you in your business decision making so that you are properly informed as to how you can save money when it comes to taxation.
You may find yourself thinking, “Wait a minute, is this legal? I don’t want to cheat the books or practice tax evasion. I want a purely honest solution”. To put you at ease, tax planning is the honest and intelligent solution to saving money on your tax. There is no prohibition in SA tax law about reducing your payable tax and there are a number of ways this can be done that may be applicable to you, including:
Retirement: Each year, a tax payer is given a retirement figure that is tax deductible. The full amount should be utilised to maximise your tax saving.
Dividing your income: If you are earning a salary but your spouse is not, or vice versa, a portion of your salary can be allocated to your spouse up to the maximum tax threshold before any tax is payable.
Donations: You are legally allowed to make donations up to a certain limit each year before there are tax implications. Using this correctly and over a length of time can save you a lot of money.
These are just a few of many methods we can use in tax planning. Speak to a tax consultant today. The amount you will save using their professional advice as well as the value they will add to your business, will far outweigh the relatively small amount of their fees.
Brett Dirmeik is a Cape Town accountant and tax consultant who offers a range of services including tax consultation and tax advice. Would you like to make a tax saving today? Then call Brett on 021 421 4444 to start your tax planning.