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Tips to understand the tax code for businesses.

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Being a citizen of a well civilized nation, we all are responsible for paying the tax that is liable on each one of us. Whether we purchase a coffee, or a dress, it’s mandatory for all of us to pay the tax along with the actual prices. Some of the retailers, and purchasers made it clear that the price is inclusive of taxes, while some go for mentioning it’s exclusive anv we have to pay for it beforehand. An unexpected tax bill can ruin anyone’s perfect day, or a perfect lunch date.

We all like surprises, and want to surprise each other with something exciting but the truth is way more than what we thought of. Instead of shocking yourself with a tax bill, the best thing is to minimize the tax bills, and pay the bill at the right time.

So, for your ease, we’re back with some ways to reduce the tax bills, and cut them to the maximum. However, remember that if you don’t pay the bill on time, you will have to pay extra which is quite frustrating.

The Conventional Tips To Pay Less Tax

These tips are a part of GTS recommendations, and once you file your tax return, we actually analyzeit and then produce a unique tax recommendation that optimizes the deductions so you have to pay less, and get the refund instantly. However, these tips covered below are the possible recommendations, and may not be applicable to individuals.

1.     A Contribution Towards A Retirement Fund

The first contribution is towards the retirement plan in which the limit is upto 27,5% of the greater tax income you’re planning to pay. This simply means that the total contribution is less if you plan to pay more in the future. Ultimately, the tax reduction will always be limited to the actual contributions you actually have to make.

In reality, your pension ratio contributions are structured via your employers, and still you can top-up the retirement savings by contributing to the RA funds. However, you still may not access the RA funds, until you’ve crossed 55 years of age.

2.     Have Your Own Tax Saving Account

It’s recommended to everyone to at least have a savings account, in which they can save their money and don’t pay tax through it, otherwise if you’re a defaulter all your money is deducted from that account which is your only financial asset. However, tax saving accounts are offered by financial institutions that invest in your money, and are a perfect combination of financial products such as unit trusts, bank savings accounts, fixed deposits, bonds, etc.

And you know the major difference between a savings account or investment account is of all the returns, like the interest ratio, dividends, and capital gains earned with the tax free in your hands. This ultimately means that you’re not liable to pay tax on the growth of your investment neither you decide to withdraw from any of your account.

3.     Donate To A SARS Registered Charity

Thirdly, we have a public benefit organization (PBO) which is a non-profit organization, which acts as a special approval by the SARS in which you don’t have to pay any tax on the donations. Moreover, the organization is most likely involved in charitable work, like healthcare, education, poverty alleviation, and conservation along with religious services.

Moreover, your contributions are registered with PBO’s like the tax deductible upto a limit of around 10% of your total taxable income. Any donations exceeding the limit are then carried forward and claimed to have a deduction in the following tax years.

4.     Read The Prices Before Purchasing Anything From Any Shop

Lastly the most important step is to learn about the prices, and know the tax before you purchase anything from anyone. Many people don’t pay the tax on time, and then they become defaulter and have to pay the taxes later with increments. Moreover, avoid going to eatery places where you know the tax would be more than the expected ratio. In this way you will save your money, and ultimately would have to pay less than the expected tax.

5.     Keep A Logbook For Travel Allowance

We also know about travel allowance, which is a taxable fringe benefit, which means that it will be included in your taxable income, and you will be taxed on it. However, you keep a logbook for recording your business, and claim a travel deduction against it, which could give a reduction in your tax owed to SARS. Ensure that you make use of your Travel Deduction Calculator to see the amount of the travel deduction you can claim.

6.     Keep A Logbook For Car Allowance

When we talk about travel allowance, car allowance comes alongside. The use of the employer provided car is a taxable fringe benefit, which means you need to keep a logbook for recording the business where you can claim a travel deduction which could reduce your tax shares.

Wrapping Up

And that’s all for the day! I hope you enjoyed reading about tax deduction ways, and how you can save more. However, if you still have some questions in mind related to anything mentioned in the blog then feel free to share in the comments section.

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