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2020 TAX SEASON: HOW TO SAVE and avoid penalties Fadia Arnold writes that there is no way of avoiding tax if you are eligible to pay it, and procrastinating could cost you in penalties
IT WAS on 13 November 1789 that Benjamin Franklin wrote in a letter to Jean-Baptiste Leroy – a phrase that has reverberated ever since: “Our new Constitution is now established and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes”. The thought had been expressed by two earlier writers. Daniel Defoe in The Political History of the Devil (1726) had said: “Things as certain as death and taxes, can be more firmly believ’d”, and even earlier in Christopher Bullock’s The Cobbler of Preston (1716) appears the line, “Tis impossible to be sure of anything but Death and Taxes”. The above quotes have been used throughout the last several centuries as a reminder that tax is a finite part of one’s life and there is no way of avoiding it if you are eligible to pay it, most notably, if you earn an income. Many taxpayers, despite the fact that the South African Revenue Service (SARS) has made the manner in which an individual is required to pay income tax simplified by means of its online system, still find the idea of paying tax complicated and rely heavily on tax practitioners to assist them in filing their tax returns or in reducing their overall tax to be paid. There are several types of taxes to be paid in South Africa; however this piece will focus on income tax only, being what I have personally
found to be the bane of my existence during busy and difficult times. I recall quite vividly the year I was pregnant and on maternity leave for another year thereafter that I merely did not have the time or the energy to deal with filing tax returns and working out the online system all by myself. Note to those who have found themselves in similar forgetful and preoccupied periods: not filing your returns may lead to penalties and fines. Income tax, already being burdensome, is not more appealing if you are left with penalties for late filing of returns or not filing at all. Lesson: file your returns, even if you have to resort to paying a tax practitioner to assist you. In addition to finding a tax practitioner to assist me this season, I requested some advice from my wealth management consultant, Nazeem Samodien, who has been working in the banking and finance industry for well over a decade, on ways to reduce one’s taxable income and increase one’s savings, and received the following handy tips I was not previously aware of: Medical scheme deductions: If you are contributing to a private medical aid scheme, you are able to claim back medical expenses. Tax-free investments: These are investments that are not taxed on interest, dividends or
