Tax filing season is upon us, with auto assessments from SARS starting on the 7th of July.
Therefore, I have decided to discuss a very underrated tax deduction that people tend to misunderstand, which is charitable donations.
Donation Limit: You can deduct up to 10% of your taxable income (excluding retirement fund lump sums and severance benefits) for donations made to Section 18A-approved PBOs (Public Benefit Organisations).
Excess Donations: If your donations exceed the 10% limit, the excess amount will be carried forward to the next tax year and can be claimed then.
Section 18A Certificate: To claim the deduction, you must obtain a Section 18A certificate from the PBO, which includes details such as the PBO’s registration number, the amount donated, and confirmation that the donation qualifies for a tax deduction.
Example Calculation
Let’s say your taxable income for the year is R500,000, and you donate R50,000 to a qualifying PBO.
Maximum Deductible Amount: 10% of R500,000 = R50,000
Taxable Income After Deduction: R500,000 – R50,000 = R450,000
Tax Savings: Assuming a marginal tax rate of 31%, the tax saving would be 31% of R50,000 = R15,500.
Thus, by donating R50,000, you reduce your tax liability by R15,500. This is a great way to reduce your tax liability while also doing good.
Please contact me if you need more information or other ways to reduce your tax liability.
Thank you, Thank you, Thank you
In June, I had the honour of receiving a Stonehouse Achievers Award, recognising me as one of the top 10 advisers within the group.
I remain deeply grateful for the trust you place in me to help manage your financial journey.
This is a responsibility I take seriously, and I sincerely thank you for your continued support and confidence.
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