What does tax efficiency mean?
Tax efficiency
is not a new concept and practice that helps you claim the allowances and deductions that SARS have put in place. A common deduction is the medical tax credit and ‘of our pocket’ medical expenses. Another is claiming ‘home office’ expenses when you work from home. This is relevant currently with the global pandemic.
You don’t like to pay tax and nobody can blame you for that. Having said that, you have to pay what is due, meaning that if you earn a salary or make a profit, there is tax to be paid. Add the saying goes, pay what is due.
How do I go about being tax efficient?
This is the ‘technical side’ of things and where we can help you. We have the knowledge to help you but we still need your help. Your help is simple. Collect all the information so we can go through it and help you through the process. Your part is where most people fall down and where the moaning about hating tax comes in. The most common reason for this (as worth everything in life) is you put off what you don’t want to do or don’t like doing. The papers and slips pile up and you can’t remember and then you give up and the hatred for tax continues.
How do I overcome this?
Great news, You can start today!
HOW? ‘Easy peasy lemon squeezy’ as my kids would say.
1. Give us a shout and we can tell you what you need to keep or throw away. (www.bcas.co.za/contact-us)
2. Next time you go out and spend money on an item(s), keep the slip or invoice or whatever.
Simple, what next? DO NOT put them in a “safe place”. These are notorious for “eating slips” much like a dog and homework, as well as the ink on the slips, fade so make a digital copy of it.
Throw the slip away! Store it in a place that is accessible to you at a moments notice.
I now have a file of slips, now what? When it comes closer to tax season, we will contact you and guide you further on what you have to do with the file.
There is one more step to you role. We need that information on the slips. This is where you need to collate them on an excel spreadsheet or similar and then send it to me.
ANOTHER TOP TIP: spend time every week, capturing the slips onto the spreadsheet to save time later on.
TOP TIP: take a photo of the slip.
Common documents needed to be kept for maximum tax efficiency:
1. Logbook: if you do any travelling for business purposes, you need a record of the kilometres driven. Opening and closing odometer, the reason for a visit etc.
2. Medical expenses: slips and proof of payment for any PRESCRIPTION medication. No offer the counter medicine is allowed. That’s of it is not covered by any medical aid.
3. Some employees are Allowed to claim entertainment expenses with certain conditions that apply.
LAST TOP TIP: even if your medical aid does not cover the medicine, all the pharmacists to submit it to medical aid anyway. This will take care of the slip for you as SARS will receive it from your medical aid.