Tax Deductions in South Africa: Meaning and How to Claim
Tax & Compliance
Explained Simply
Deductions reduce the income that tax is calculated on, while rebates and credits reduce the tax itself. Common examples for individuals include retirement fund contributions, certain business or trade expenses and home office costs where the legal requirements are met. Pension and retirement contributions that your employer pays over are shown on your IRP5. To claim a deduction on your return, you enter the amount in the relevant section of your ITR12 on SARS eFiling and keep supporting documents, because SARS can ask you to prove the claim. Only expenses the Act allows can be deducted, and private expenses generally cannot.
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Related Terms
- Taxable IncomeTaxable income is the portion of total income on which income tax is calculated, after subtracting all allowable deductions and exemptions as defined by SARS.
- Tax RebateA tax rebate is a fixed rand amount that SARS deducts directly from the income tax calculated on your taxable income, reducing the tax you pay.
- IRP5 CertificateAn IRP5 is an employee tax certificate issued by employers in South Africa each tax year, summarising gross remuneration, PAYE deducted, pension contributions, medical aid, and other payroll deductions.