Jan 2, 2015 - 2015. Budget Speech. ⢠27 February 2015. 201502 IRP6 ... all the best for 2015; .... Transfers between t
Newsletter Issue 2 January 2015
Important Dates: •
30 January 2015 2014 ITR12 Submission Deadline for Provisional Taxpayers
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25 February 2015 Budget Speech
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27 February 2015 201502 IRP6 Submission Deadline for Provisional Taxpayers
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01 July 2015 Start of 2015 Tax Season
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31 August 2015 201601 IRP6 Submission Deadline for Provisional Taxpayers
In this edition… *2014 Highlights *Medical tax credit *Tax-free investments *Income protection policies *Wearing glasses is not automatically an impairment in the eyes of SARS *Using a registered tax practitioner *Tips
2014 Highlights A new year has arrived and Bendels Consulting wishes you and your family all the best for 2015; we hope that this year brings you peace, success and prosperity! Before we move onto upcoming tax law changes, we would like to share with you what we got up to in 2014. On 05 September 2014, we donned our Casual Day stickers as part of the National Council for Persons with Physical Disabilities in South Africa’s flagship annual fundraising project. We are proud to have made a donation to the KZN branch of Multiple Sclerosis South Africa on 09 September 2014. Contact our Durban office on 031 535 7068 if you would like more information on how you can assist. Bianca Strydom, who has been with our team since October 2013, assisted Down Syndrome Association Amathole at their fundraising Golf Day which took place at the East London Golf Course on 20 September 2014.
Bendels Consulting director, Richard Rogers, took part in the 10km Urban Run obstacle race on 21 September 2014 in support of Leonard Cheshire Disability in Port Elizabeth. For more information on how you can assist, visit their website. On 11 October 2014, Richard and Bianca participated in Port Elizabeth White Cane Fun Run in support of the Nkosinathi Foundation and Khanyisa School for the Blind. Bianca was a guide for Anita and Loandri and Richard assisted Loyiso and Mzolisi. Find out more about the Nksoinathi Foundation here. Bianca had such a wonderful time at the Golf Day that she decided to sponsor and manage a table at the Down Syndrome Awareness High Tea fundraising event which took place in East London on 25 October 2014. Bendels Consulting also sponsored prizes for this event. If you would like to assist Down Syndrome Association Amathole, please contact Denise Taylor via email on
[email protected]. On 23 October 2014, Richard attended an event where Advocate Thuli Madonsela was the guest speaker. The Public Protector said that the public does not need an invitation to engage with government and lawmakers and encouraged citizens to play an active role in being a part of the change that we as a country yearn for. Bendels Consulting actively engages with National Treasury and SARS on matters pertaining to disability tax law where we feel changes need to be made. We will continue to be a voice for this group of taxpayers.
Richard attended the Aurora Special Care annual fundraising fete which took place in Port Elizabeth on 25 October 2014. Bendels Consulting is proud to have made a donation in support of the fundraiser. It is truly remarkable and inspiring to see the impact of Aurora’s care and we look forward to growing our relationship with this centre in 2015. Watch this space! Visit Aurora’s website to learn more about their incredible centre. Bendels Consulting provides informative pro bono presentations with the aim of ensuring that qualifying taxpayers become aware of the tax relief available to them. We would like to thank the following organisations that hosted us during 2014: • • • • • • • • • • • •
Bellavista School – Johannesburg Bloom School – Durban Chrysalis Preschool – Pretoria Crossroads School – Johannesburg Newton House School – Johannesburg North Sands Learning Academy – Johannesburg Oakley House School – Cape Town SNAP Academy – Cape Town Summit Rehab based at Netcare Rehabilitation Hospital – Johannesburg Tomorrow’s People Schools – Pretoria Unity College – Johannesburg Wiggles and Squiggles School – Johannesburg
If you would like Bendels Consulting to present at your organisation, please contact us.
Medical Tax Credit A reminder that for the 2015 tax year (01 March 2014 to 28 February 2015), there is no longer a medical deduction. Instead of receiving a tax deduction which reduced your taxable income, the law has changed to introduce a tax credit system whereby qualifying medical expenditure will translate to a 33.3% tax credit; this credit directly reduces your final tax liability. This is a move to ensure that all taxpayers receive the same level of tax relief; previously, the higher one’s income, the more relief one received per Rand spent on medical and disability related expenses. From a tax compliance point of view, this does not change anything with regard to the information that you are required to provide us with; you will submit your tax documents to us as per usual and we will take care of the rest.
Tax-Free Investments In an effort to get South Africans saving, a new tax incentive is set to be introduced on 01 March 2015. The idea is to have certain designated savings products that will not attract any tax on the returns or gains generated by the investments. What’s the catch? •
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You will only be allowed to contribute R30 000 per year. Any excess contributions will attract a hefty 40% penalty tax in that year. You will only be allowed to contribute R500 000 in your lifetime. Any excess contributions will attract the 40% penalty tax. You can have more than one account, but the same limitations apply to all of your accounts in aggregate. You can withdraw contributions, however, such withdrawals will not reduce the contributions that you have made for the purposes of determining the limits mentioned above. This is to encourage you to avoid dipping into these tax-free savings accounts for non-essentials. Transfers between tax-free savings accounts will not be considered as new contributions.
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It is expected that the R30 000 annual limit will increase over time to take inflation into account, however, the R500 000 lifetime limit is most likely to remain intact. The annual interest exemption (currently R23 800 for taxpayers under 65), looks set to remain, however, it is expected that this will no longer be increased over time with inflation. Whilst it is important to discuss such matters with your financial planner, it could be worthwhile to ensure that any interest-only investments that earn interest at less than the annual exemption are kept away from your ‘tax-free investments’ as such interest would be tax exempt in any case and so you could avoid unnecessary contributions counting towards your R30 000 annual limit that could be utilised for other investments. We expect more information to be made available shortly by National Treasury and SARS with regard to what products will qualify and the administrative side of these new accounts. As 01 March 2015 approaches, speak to your broker, financial planner, or financial institution about how you can take full advantage of this new tax incentive.
Income Protection Policies A reminder that as of 01 March 2015, contributions made by you to an income protection policy will no longer be tax deductible, however, any proceeds (benefits) will be tax free as of that date; currently such proceeds are taxable.
Wearing glasses is not automatically an impairment in the eyes of SARS The below article was in the Personal Finance section of The Weekend Argus, The Saturday Star , The Pretoria News Weekend and The Independent on Saturday on 01 November 2014.
The fact that you wear glasses or contact lenses does not in itself mean you have a physical impairment and can claim tax relief for related medical expenses. The medical expense section of your South African Revenue Service (SARS) tax return has a field for “any physical impairment expenses not recovered from your medical scheme”. For tax purposes, there is a distinction between a physical impairment and a disability. A person diagnosed by a registered medical practitioner as having a disability, as defined in the Income Tax Act, is entitled to greater tax relief than a person with a physical impairment. The Act defines “disability” as “a moderate to severe limitation of any person’s ability to function or perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment, if the limitation has lasted or has a prognosis of lasting more than a year and is diagnosed by a registered medical practitioner”. The Act does not define “physical impairment”. Richard Rogers, the director of Bendels Consulting, a tax firm that assists taxpayers with disabilities, says that, according to SARS, a physical impairment is regarded as less restraining than a disability, as defined. This means there must be some form of restriction on your ability to function or perform daily activities, but it is less than a “moderate to severe limitation”. Rogers says SARS does not require a physical impairment to be diagnosed as prescribed, as required in the case of a disability. This means that if the limitation on your ability to function or perform daily activities is less restricting than a disability, you do not need to submit an ITR-DD (confirmation of diagnosis of disability) form to qualify for the tax relief associated with a physical impairment. Rogers cautions that, in terms of the Tax Administration Act, the taxpayer bears the burden of proving that an amount qualifies as a reduction of tax payable or as a deduction. So, if you are seeking tax
relief for a physical impairment, you need proof of that your ability to function or perform daily activities is limited – for example, a letter from a doctor or a therapist. Rogers says the ITR-DD form indicates for each type of impairment whether or not that impairment should be assessed before or after maximum correction. “Maximum correction” means appropriate therapy, medication or the use of devices. Regarding visual impairment, Rogers says that if your ability to see is not at all limited when you wear glasses or contact lenses, you are not considered to have a physical impairment for tax purposes, because your ability to see is no longer limited after maximum correction. If, even when you wear glasses or contact lenses, you have some limitation on your ability to see, but that limitation is less than moderate to severe, you would be considered to have a physical impairment. Rogers notes that when it comes to a hearing impairment, on the other hand, your impairment needs to be assessed without you making use of an amplification device such as a hearing aid – that is, before maximum correction.
Using a registered tax practitioner All tax practitioners are now required by law to be registered with a recognised controlling body (RCB) as well as with SARS. Bendels Consulting director Richard Rogers is a member of the South African Institute of Tax Professionals; the largest professional tax body in South Africa. Any person who is not registered with a RCB may not submit tax returns on your behalf. Follow this link to check the registration status of your tax practitioner. Richard’s Tax Practitioner Number is PR-0003865.
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For every expense that you incur in consequence of disability, ensure that you maintain proof of payment. It is also advisable to retain the invoice that matches each proof of payment. Make payments via EFT instead of cash and save the EFT transaction history straight away. Take note of your vehicle odometer reading on 01 March every year. Do this even if you do not have a business travel allowance and record the reading for all of your vehicles. Maintain a tax folder on your computer for each tax year and put all relevant material into the folder as soon as you receive it. If you are going to incur a new type of expenditure in consequence of disability, it is advisable to contact us so that
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we can advise whether the expense can be taken into account and what records should be maintained. It is advisable to submit all medical related expenditure to your medical scheme, regardless of whether they do not cover that expense or if medical savings have been exhausted. Be sure to check first whether you will be affecting your payment thresholds and any other limits before doing this. Like Bendels Consulting on Facebook to keep in the loop and visit www.bendelsconsulting.co.za
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