Tax News

Maximize Tax Savings in South Africa: Solar, Medical Aid, RAs & Donations Explained

Published by
WIlliam Dube
  1. Solar Incentive: South African taxpayers can claim a 25% rebate, up to R15,000, on rooftop solar panel installations between 1st March 2023 and 29th February 2024, reducing their tax liability for the 2023/24 tax year.
  2. Medical Aid Tax Credits: Taxpayers qualify for tax credits based on their monthly medical aid contributions, with additional credits possible for qualifying medical expenses not reimbursed by medical aid.
  3. Retirement Annuities and Donations: Deductible contributions to retirement annuities have an annual cap, while tax deductions on donations to SARS-approved public benefit organizations are limited to 10% of one’s taxable income.

As the deadline for the 2024 Income Tax return approaches, taxpayers in South Africa should remain vigilant about their tax affairs to minimize their tax liability, advises Morné Janse van Rensburg, Manager at Hobbs Sinclair Advisory. Over the past two years, significant tax policy changes have occurred in areas such as medical aid, solar financing, and more, making it crucial for taxpayers to understand how to take advantage of these benefits effectively.

Solar Incentive

From 1st March 2023 to 29th February 2024, individuals installing rooftop solar panels can claim a rebate of 25% of the panel’s cost, up to a maximum of R15,000. Finance Minister Enoch Godongwana states that this incentive could reduce taxpayers’ tax liability for the 2023/24 tax year and will be available for one year.

Hobbs Sinclair urges individuals to seize this opportunity as soon as possible, as stock is already limited, and waiting lists are several months long. To qualify for the rebate, solar PV panels must be installed at a residence primarily used for domestic purposes. PAYE taxpayers can claim the rebate during the 2023/24 filing season, while provisional taxpayers can claim it against their provisional and final payments.

Only the individual paying for the solar panels can claim the rebate, and the panels must be brought into use on or before February 2024, accompanied by a Certificate of Compliance.

Medical Aid

Main medical aid members qualify for tax credits based on their monthly contributions. Additionally, taxpayers may qualify for extra medical aid tax credits based on medical expenses paid for by themselves or dependents that were not reimbursed by medical aid.

Hobbs Sinclair highlights the following qualifying expenses:

  • Services and medicines provided by registered medical practitioners, dentists, optometrists, homoeopaths, naturopaths, osteopaths, herbalists, physiotherapists, chiropractors, or orthopedists
  • Hospitalization in a registered hospital or nursing home
  • Home nursing by a registered nurse, midwife, or nursing assistant, including services supplied by nursing agencies
  • Medicines prescribed by registered physicians (as listed above) and acquired from registered pharmacists
  • Expenses incurred outside South Africa for services rendered or medicines supplied substantially similar to the services and medicines listed above
  • Expenses prescribed by the Commissioner and necessarily incurred due to physical impairment or disability

Taxpayers should submit these expenses to their medical aid, even if they pay in full, to include them on their Income Tax certificate for the tax year. The new monthly medical scheme fees tax credit rates for 2023/4 are R364 for the primary member and the first dependent, and R246 for each additional dependent.

Retirement Annuities (RA)

While there is no limit on annual contributions to retirement annuities, there is a cap on the deductible amount for tax purposes. This limit is 27.5% of one’s remuneration or taxable income, up to a maximum of R350,000 per year. Any excess annual contributions are carried forward to the next tax year. Unclaimed deductions can be offset at retirement to increase the tax-free portion of the lump sum received upon retirement.

Taxpayers should monitor their cash flow and estimated tax liability throughout the year to avoid insufficient liquidity when making additional investments.

Donations

Tax deductions can be claimed for donations made to SARS-approved public benefit organizations in a given tax year, limited to no more than 10% of one’s taxable income before considering the deduction. Upon donating, the organization should issue a Section 18A certificate specifying the date and value of the donation and their relevant details. SARS will disallow any donations claimed for tax purposes without this certificate, warns Hobbs Sinclair.

Solar Incentive Rebate Details

Rebate PercentageMaximum RebateValidity Period
25%R15,0001st March 2023 – 29th February 2024
Caption: Key information on the solar incentive rebate for South African taxpayers.

Medical Scheme Fees Tax Credit Rates (2023/4)

Member TypeTax Credit Rate
Primary MemberR364
First DependantR364
Additional DependantsR246
Caption: Monthly medical scheme fees tax credit rates for the 2023/4 tax year.

Retirement Annuity Deduction Limits

Deduction Limit (%)Maximum Deduction (R)
27.5%R350,000
Caption: Annual deduction limits for retirement annuity contributions in South Africa.
WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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Published by
WIlliam Dube

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