Every February, the South African tax year draws to a close — and with it, a window of opportunity that most people simply let pass. The decisions you make (or don’t make) before the end of the tax year can have a meaningful impact on how much you keep and how much you hand over to SARS.
Here are five practical steps worth considering before the deadline.
1. Maximise your retirement fund contributions
South African tax law allows you to deduct up to 27.5% of your taxable income (capped at R350,000 per year) for contributions to approved retirement funds — pension funds, provident funds, and retirement annuities.
If you’re not already contributing up to this limit, topping up a retirement annuity before year-end is one of the most straightforward ways to reduce your taxable income. The benefit is immediate: every rand you contribute within the limit reduces your tax bill at your marginal rate.
“Tax-efficient investing isn’t about clever tricks — it’s about using the structures that already exist, consistently and deliberately.”
2. Use your tax-free savings allowance
South Africa’s tax-free savings account (TFSA) allows you to invest up to R36,000 per year (with a lifetime limit of R500,000) in a way that shields all growth, dividends, and interest from tax — permanently.
If you haven’t used your full R36,000 allowance this tax year, consider doing so before the deadline. Once the year ends, that annual allowance is gone — it doesn’t roll over.
3. Consider income splitting where appropriate
If one spouse earns significantly more than the other, there may be legitimate opportunities to structure savings and investments in a way that spreads income more evenly. This doesn’t mean artificial arrangements — but proper planning around who holds which assets can reduce the overall household tax burden over time.
This is an area where professional advice pays for itself many times over.
4. Review your medical tax credits
Many people don’t realise the full extent of what qualifies for medical expense deductions. Beyond your medical aid contributions (which generate a fixed monthly tax credit), you may be entitled to additional deductions if your out-of-pocket medical expenses exceed a certain threshold.
Keep records of all medical expenses throughout the year — not just the big ones. Dental work, specialists, chronic medication, and even certain travel costs can qualify.
5. Harvest capital losses strategically
If you hold investments outside of retirement funds that are sitting at a loss, there may be a case for selling them before year-end to offset gains realised elsewhere. This is known as tax-loss harvesting, and it can reduce your capital gains tax liability.
The key is to be deliberate. Don’t sell a good long-term investment just for a short-term tax saving — but if you were planning to exit a position anyway, timing the sale before year-end could be advantageous.
A note on capital gains
Remember that South Africa provides an annual exclusion of R40,000 on capital gains for individuals. Any gains below this threshold are tax-free, so make sure you’re factoring that in before making decisions.
The bigger picture
Tax planning isn’t about one dramatic move in February. It’s about building the right habits and structures throughout the year, so that when the deadline arrives, you’ve already done most of the work.
If you’d like help reviewing your tax position and making the most of the allowances available to you, we’re here to help.
