Top Tax Deductions in South Africa You Might Be Missing

By / September 19, 2025

If you are a salary earner, freelancer, landlord, or small-business owner in South Africa, there is a strong chance you […]

Top Tax Deductions in South Africa You Might Be Missing

If you are a salary earner, freelancer, landlord, or small-business owner in South Africa, there is a strong chance you are leaving legitimate tax savings on the table. SARS adjusts rules, thresholds, and administrative guidance regularly, and many valuable deductions hinge on small details such as the correct proof, an accurate logbook, or using the correct source code on your ITR12. This guide distils the most overlooked deductions and credits that ordinary taxpayers miss, with practical examples, checklists, and pitfalls to avoid.

Quick refresher: a deduction reduces your taxable income (for example, retirement contributions), while a tax credit directly reduces the tax you owe (for example, the medical scheme fees tax credit).

1) Retirement fund contributions (RA, pension, provident)

Why this matters: It is one of the most powerful legal levers to reduce taxable income. You can deduct contributions across all retirement funds you belong to, including employer contributions that were taxed as a fringe benefit.

How much: The deduction is limited to the lower of 27.5% of taxable income or remuneration (whichever is higher) or R350 000 per tax year. If you contribute more than the cap, the excess carries forward automatically to future years and can also reduce the taxable portion of certain retirement benefits later.

Two-pot context: South Africa’s two-pot system began on 1 September 2024. Although withdrawal and preservation rules have changed, the core contribution deduction limits remain. Your annual planning still revolves around the 27.5%/R350 000 ceiling.

Pro tip: If your income fluctuates, a pre-February top-up to your RA can harvest unused room before year-end. Excess still carries forward, so you do not lose it.

Example: Taxable income R600 000; total retirement contributions R120 000 → the full R120 000 is deductible (it is within the 27.5% cap of R165 000 and under R350 000).

2) Medical scheme fees tax credit (MTC) and additional medical expenses tax credit (AMTC)

What you can claim:

  • MTC (fixed monthly rebates) for you and your dependants. These are credits, not deductions, and they reduce tax payable directly.
  • AMTC (Section 6B formula credits) on qualifying out-of-pocket medical costs and, in some cases, contributions that exceed a formula threshold. Broadly:
    • Under 65, no disability: a percentage of [excess contributions + qualifying expenses after a 7.5% of taxable income hurdle].
    • Age 65+ or where the taxpayer, spouse, or child has a disability: a higher percentage of [excess contributions + qualifying expenses] without the 7.5% hurdle.

Documentation SARS often asks for: Medical scheme tax certificate, proof of payments for cash medical costs, scripts for chronic medication, and specialist letters for disability claims. Keep everything for five years.

Common miss: If your employer partly pays the medical aid, do not forget that the portion you paid personally still flows into the AMTC formula. Also capture all qualifying expenses that were not paid through the medical scheme.

3) Approved donations (Section 18A)

Donations to approved public benefit organisations qualify for a deduction up to 10% of taxable income. Any excess carries forward. You must have a valid Section 18A receipt that contains the prescribed wording and details. Payroll giving via your employer is also permitted within limits.

Tip: If you are near the cap, time your giving before the end of February to claim it in the current year, or plan carry-overs strategically.

4) Travel for work: logbook, allowances, and reimbursements

If you receive a travel allowance or a reimbursive allowance, you can claim business travel expenses only if you keep a proper logbook. Record opening and closing odometer readings, dates, destinations, business purpose, and kilometres. SARS offers a simple eLogbook template to help you keep consistent records.

Key mechanics to remember:

  • Employers typically subject 80% of a fixed travel allowance to PAYE unless at least 80% of use is for business, in which case 20% is withheld.
  • The final tax calculation is based on your actual logbook. If the logbook is incomplete or missing, SARS can disallow the claim in full.
  • For reimbursive allowances, SARS publishes a prescribed per-kilometre rate each year. If you are reimbursed at or below that rate and meet the rules, amounts may not be taxable. If reimbursed above the rate or in combination with a fixed allowance, additional rules apply.

Practical tips:

  • Record every business trip. Missing weeks can sink a claim.
  • Where you use your own vehicle, consider the cost-scale method versus actual cost plus wear-and-tear, and choose the method that yields the best outcome on your facts.

5) Home-office expenses (and the CGT sting)

This area can yield real savings but comes with strict rules:

  • You must regularly and exclusively use a specifically equipped area at home for your trade or employment duties.
  • Salaried employees face limits under Section 23(m); generally you must perform more than 50% of your duties from the home office to qualify. Commission earners have wider scope to deduct bona fide business expenses.

Allowable costs (apportioned by floor area) may include rent, interest on a bond, rates and taxes, electricity, cleaning, and wear-and-tear on office equipment. Keep a floor plan, photos, invoices, and working-from-home evidence.

Critical caution: A successful home-office claim can “taint” your primary residence for CGT purposes. On eventual sale, the R2 million primary residence exclusion will be apportioned, and the office portion may not be fully sheltered. Factor this into your long-term plan.

6) Rental property deductions most owners miss

If you earn rental income, you may deduct expenses in producing that income, including:

  • Interest on the bond (not capital repayments)
  • Rates and taxes, levies, insurance, and agent fees
  • Repairs and maintenance (but not capital improvements)
  • Wear-and-tear on furniture and appliances used by tenants
  • Advertising and legal fees linked to the rental trade.

Repairs vs improvements: Painting and fixing a broken geyser are typically repairs (deductible). Adding a new bathroom is likely an improvement (capital; generally not deductible now, but it may increase base cost for CGT). Keep before/after photos and itemised invoices.

Loss ring-fencing watch-out: If your rental runs persistent losses, Section 20A can ring-fence that loss to the rental trade so it cannot reduce your salary income. Government has signalled potential tightening of these rules, so plan conservatively.

7) Wear-and-tear (Section 11(e)) on tools and equipment

You can claim tax depreciation on business-use assets using SARS’s guidance on write-off periods. For example, computers and laptops are typically written off over three years; office furniture often over six. Track the purchase date, cost, and business-use percentage.

Example: A laptop used 80% for your trade with a three-year write-off can yield a meaningful deduction each year if you document the business use credibly.

8) Subsistence allowances: do not ignore the deemed amounts

For business trips requiring an overnight stay inside South Africa, if your employer pays a subsistence allowance, SARS deems fixed amounts as spent without receipts:

  • A daily amount for meals and incidentals
  • A smaller daily amount for incidentals only.

For day trips, reimbursements for meals and incidentals up to a SARS-set threshold with proof are often not taxable in the employee’s hands. Keep travel authorisations, itineraries, and receipts where required, and apply the thresholds correctly for the relevant year of assessment.

9) Interest exemption

Natural persons can earn a portion of South African-source interest tax-free each year. The typical exemption is higher for those aged 65 or older. This remains relevant for fixed deposits and money-market funds even in a world with tax-free investment accounts.

Planning angle: In a household, consider holding interest-bearing accounts in the name of the older spouse to maximise the higher exemption. Apply substance over form regarding ownership and avoid artificial donation-splitting.

10) Commission earners vs salaried employees (Section 23(m) in practice)

Many salaried employees incorrectly claim professional memberships, data, phone, and other business-like costs against salary. Section 23(m) generally prohibits these deductions. The exception is where you are an agent or representative and most of your remuneration is commission; then ordinary trade deductions are possible.

Practical step: Check your IRP5 income codes and contracts. If you are commission-based, keep detailed records to support deductions such as advertising, telecommunications, stationery, and travel beyond the allowance.

11) Income-protection premiums: do not claim them

Premiums for policies that insure loss of income (disability income cover) are not deductible for individuals. The corollary is that subsequent policy payouts are generally tax-free. Many taxpayers still try to claim the premiums and trigger audits.

12) Renewable-energy incentives for businesses (time-sensitive)

If you run a trade through a company or as a sole proprietor, allowances under the Income Tax Act can significantly reduce taxable income when you invest in qualifying renewable energy assets.

  • A special super-deduction for new investments applied during a limited window that ended on 28 February 2025. Claims now must relate to qualifying assets brought into use by that date.
  • Thereafter, the long-standing regime for renewables remains the baseline, offering accelerated write-offs for certain generation assets.

Action: If you installed solar before a relevant cut-off, ensure your asset registers, commissioning certificates, and invoices are in order so that you can claim the correct allowance in the relevant return.

13) Non-resident nuances (for landlords abroad)

If you are non-resident but own property in South Africa, the source of rental is where the property is situated. You must declare the South African rental and you can claim the same deductible expenses listed above. Double-taxation agreement relief is then considered in your country of residence.

What to keep (and for how long)

SARS can ask for supporting documentation for up to five years after submission. Maintain a digital file per tax year containing:

  • IRP5s/IT3 certificates, medical aid certificates, and RA contribution confirmations
  • Section 18A donation receipts
  • Travel logbook and fuel/maintenance records
  • Home-office evidence (floor area calculation, photos, floor plan, utility bills)
  • Rental schedules: interest certificates, levies, insurance, rates, repair invoices, agent statements
  • Asset registers for wear-and-tear and renewable-energy investments.

Common mistakes that cost refunds

  1. Claiming home-office costs without exclusive use or proper apportionment, and overlooking CGT consequences.
  2. Forgetting RA top-ups before year-end, or not capturing employer-fringe contributions properly.
  3. No logbook for travel, which collapses the deduction even if you drove extensively for work.
  4. Misclassifying rental expenses, capitalising repairs or deducting improvements.
  5. Claiming disallowed employee expenses under Section 23(m) when you are not a commission earner.
  6. Ignoring the interest exemption or placing interest accounts in the wrong spouse’s name.
  7. Applying subsistence rules incorrectly, leading to over-taxing or under-substantiation.

Quick-win checklist before you file

  • Add up all retirement contributions (including those taxed as fringe benefits) and check headroom to 27.5%/R350 000.
  • Pull your medical scheme certificate and cash slips and compute MTC + AMTC.
  • Gather Section 18A receipts; cap at 10% of taxable income; note carry-forward.
  • Export your travel logbook and choose the best calculation method.
  • For a home office, audit exclusivity, floor area, and time-spent tests; weigh the CGT trade-off.
  • For rental, separate repairs from improvements and capture interest correctly.
  • Apply subsistence deemed amounts correctly for overnight and day trips.
  • Ensure wear-and-tear schedules are up to date (laptops, phones, furniture).
  • Do not claim income-protection premiums; adjust expectations on payout tax.
  • If you invested in renewables, confirm which allowance applies based on the in-use date.

Mini-scenarios to bring it to life

A) The late-February RA top-up
Naledi earns R850 000 and contributed R150 000 to pension/RA this year. Her 27.5% cap is R233 750, well under the R350 000 annual limit. A R80 000 top-up before 28 February could cut her taxable income by the same amount, saving thousands of rand at her marginal rate. Any excess will carry forward.

B) The rock-solid travel claim
Sipho receives a travel allowance and keeps a meticulous eLogbook. He records 18 500 total km and 12 300 business km. With the prescribed reimbursive rate and proper evidence, his claim survives verification and he avoids SARS disallowances that typically hit those with patchy records.

C) The rental repair vs improvement
Amahle’s tenant damages a door and geyser (repair: deductible). She also remodels the kitchen with custom cabinetry (improvement: capital). She claims only the repair invoices now and keeps improvement costs for CGT base-cost records.

D) The home-office trade-off
Johan, a salaried remote worker, meets exclusivity and time tests and claims a modest home-office deduction. He also notes that this will apportion the R2 million primary residence CGT exclusion on sale, which he factors into a separate long-term property plan.

Final word

The difference between an average and an excellent tax outcome often comes down to evidence and knowing exactly what is allowed for your situation. Focus on the high-impact items first (retirement, medical credits, travel, rental), maintain meticulous records, and be conservative where rules are tight (home-office and Section 23(m)). If your facts are nuanced, speak to a registered tax practitioner before you file.

Sources

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