General Exemptions and deductions

Investment income derived from interest and certain foreign dividends:

• For taxpayers under the age of 65... R22 300
• For taxpayers aged 65 and older... R32 000

In addition, all domestic dividend income (except dividends distributed by a fixed property company and certain foreign source dividends) will be exempt from tax.

Special rules apply to the taxation or exemption of dividends received from controlled foreign companies (CFC), depending on the level of shareholding and other conditions. We recommend that our clients seek expert tax advice in this regard.

Interrest is exempt where earned by non-residents who are physically absent from SA for 183 days or more per annum and who are not carrying on business in SA.

The exemption for foreign dividends and interest is limited to R3 700

Deductions:

Medical, dental and physical disability expenses

65 and older... no limit

Under 65

• R670 for each month in the tax in respect of the tax payer alone
• R1 340 in respect of the taxpayer and one dependent
• R410 per additional dependent
• Any medical expenses, defined as non-deductible medical scheme, and exceeding 7.5% of taxable-income (excluding retirement fund lump sums), may be deducted from taxable income (before the section 18 deduction)
• Handicapped persons……..no limit.  The deduction is claimed by the person who pays the expense. 

Taxpayers under the age of 65 may claim all qualifying medical expenses, where the taxpayer or the taxpayer's spouse or child is a handicapped person.

Any medical expenses paid by the estate of a deceased taxpayer are deemed to have been paid by the deceased taxpayer on the day before his or her death.

If paid by the employer of the taxpayer, the amount paid must, to the extent that it has been included in the income of the taxpayer as a taxable benefit in terms of the Seventh Schedule, be deemed to have been paid by that taxpayer.

Example: A husband who is self-employed is a member of a medical scheme. He has a wife and three minor children. His deduction will be R1 340 for himself and his wife and R410 per child, so his basic deduction will be R2 570. If his employer had paid the R2 570 it would have been deemed to be his contribution.

Replacement of the medical scheme contribution deduction with a non-refundable tax credit is currently under consideration.   The National Health Insurance Scheme is delayed for five years.