SARS is successful in closing the doors for loopholes in the tax act. Employees only have a few expenses that can be deducted from your taxable income. The fact that the tax brackets for individuals was not increased in the past three years, also resulted in higher tax rates. The taxpayers received annual increases, but the tax brackets remained the same, resulting income moving to higher tax brackets. Effectively, taxpayers are discounting their salary increases with higher effective tax rates.
What are the tax deductions to your disposal?
Medical expenses
For the 2025 tax year, if you are a member of a medical aid, you can claim a deductible rebate that is calculated based on the number of dependents you have.
Additional qualifying medical aid expenses may be also be claimed. This is calculated by applying a specific formula to the medical aid contributions made, medical scheme tax credits and other medical expenditures.
Contributions to gap cover policies and medical insurance are not deductible.
Business Travel Expenses
Business travel expenses can only be claimed if the employee received a travel allowance. The travel allowance code on your IRP5 will be 3701. To claim this expense, you need to keep a detailed logbook, stating the opening and closing kilometres of the vehicle used for business travel. You also need to distinguish between business and private travel. The destination and reason for the business travel must also be listed. Should you not keep a detailed travel logbook, you are not allowed to claim the travel expenses.
Pension and Retirement Fund Contributions
The contributions to a Pension, Provident or Retirement Annuity fund is deductible, but is certain limitations are applicable.
Should there be excess contributions not claimed, it can be carried over to the following year.
The employer’s deduction for contributions to the pension or provident fund, is not subject to these limitations.
Donations
Donations made to a qualifying public benefit organisation can be deducted. These organisations will issue a Section 18A certificate for the donation received.