From Tax Tables to Tax Breaks: How to make smart tax decisions

Maya Fisher French welcomes tax expert Andre Bothma to discuss personal finances

Maya Fisher French: If you listen to my podcast, you will know that two weeks ago, I spoke to Chris Axelson of the National Treasury about how the Treasury makes the decisions around the national budget and how they're going to tax us. So this week, I've invited tax expert Andre Bothma to unpack the implications of the tax proposals on our personal finances. And Andre, as it's the beginning of a tax year, I thought we could also use this time to look at ways to reduce our tax bill because, quite frankly, anyway, if I can pay less tax, the happier I'll be.

Andre Bothma: Yeah, I mean, I mean, kicking us off by paying fewer taxes. Individuals, I think over the years, the number of deductions that are available to individuals has decreased. You know, no longer can you claim income protection. Medical aid changed from a deduction to a credit system, giving you a tax discount. And the only real one that still makes a decent impact is the RA or the PPRA, which I call the Pension Provident and Retirement Annuity. So yeah, the options are, are actually less for the biggest group than for the biggest contributors to the tax collected. We have lease incentives.

Maya Fisher French: Exactly. So, I think we can; I want to go back to that a little bit later because I also did some maths around, how much more, you know because things haven't been adjusted for inflation. Things like the capital gains tax and tax exemptions. I think that's sitting at 40,000 rands, still has been for so many years, that if we adjust that for inflation, we'd be sitting at, I think, like R60,000. The big one, if I remember, was estate duty. So your first three and a half million is, free of estate duty when you pass away. But if we had adjusted for inflation, that should be around 8 million. Everyone says we need a wealth tax, but we already have one So I want to, you know, that to me is one of the things we talk about, Andre is a wealth tax. Everyone says we need a wealth tax. We already have a wealth tax. Let's be honest. I mean, when, when, when you're paying that kind of money, you know, we.

Andre Bothma: we have three forms of wealth tax. So we've got estate duty, and, and we've got donations tax. Now donations tax is a wealth tax that prevents you from obviously giving whilst you're alive, and estate duty is the one that prevents you from giving everything from basically evading estate tax, and then you've got capital gains for whenever there's a wealth transfer from yourself to another when you sell your assets. What makes the wealth tax, specifically what treasury and what other countries like the UK are thinking about doing? The wealth tax that they are proposing is a percentage on your, let's call it personal assets and liabilities. But the issue is most people's wealth is tied up in non-liquid assets, and so in order to pay a wealth tax, and this is why there was a study done at Wits University. And that's what the Davis Tax Committee want to use as a, as, as its support for a wealth tax. The issue that everybody in our industry said is that it is not a good tax to implement because you have to cash out. Yeah, and yeah, so a lot of wealth is not tied up in cash.

Maya Fisher French: you have to disinvest basically. So, it goes against investments.

Andre Bothma: You know, the best example I can give is I've got a couple on my client list who is sitting on a huge, fixed deposit. So it's great for earning interest and it's a, it's a decent fixed deposit, mass earning good interest. The problem is that because it's a fixed deposit, the tax has to be paid not from the fixed deposit interest but from out-of-pocket. And so they are out of pocket because of a tax. so they, and this is a good example of why wealth tax is a, it might be a good idea theoretically but practically it's, it's, in fact, it's actually against one of the four maxims of tax and that what's Adam Smith and one of the maxims says the tax should be easy to pay or convenient to pay wealth tax in, in the form that they want to implement it is not convenient.

Maya Fisher French: Yeah, and I think that's, you know we, I mean as I said I would argue **00**: 05:00

Maya Fisher French: already has a wealth tax. You know, the fact that, you know, they haven't adjusted, for example, the estate duty, you know, exemptions from three and a half million to eight million. It's what it should be if we just simply adjusted by inflation every year. So we're bringing in people, and you know, actually what we're doing is we're almost taxing the middle class, we're not taxing the wealthy. and that is part of the problem because, you know, three and a half million doesn't, so it's not difficult to get there. By the time you have a primary residence, you've got, you know, you've got a couple of investments. It's not difficult to suddenly be, to find yourself, you know, having to pay estate duty. So I think there's, you know, a lot is going on here around how heavy our taxations are in South Africa. And, of course, when people get angry about how much they get, how few benefits they get for it and the corruption and people, it gets very emotional. But I wanted to unpack a little bit and I've written a lot about it. This fiscal drag is the fact that this year and last year, the National Treasury or government did not adjust the tax tables for inflation. And there has been a little bit of a misunderstanding around this. So I've been saying to people, by the way, if you had an inflation-adjusted increase, you shouldn't be paying any more tax. If you paid 100,000 rand tax last year, you get a salary. Adjusted inflation and adjusted salary increase, you should still be paying 100,000 rand in tax the following year. Right. Because you should be adjusting for inflation. But that isn't happening. It means that if your salary goes up, you will be, you'll be paying slightly more tax, but it doesn't necessarily mean you're going to have less money. And I think I want to clarify that because I think people are now saying, oh, should I not get a salary increase because it means I'll move into another tax bracket. So maybe unpack that.

Andre Bothma: Yeah, I mean the, and I like to use round numbers to simplify the, to simplify the equation. And I've told this story to, you know, one-on-one, but never on a podcast platform. I had a potential client who was going to get an increase of, let's say, let's call it 100,000 or potential extra income of 100,000. Yes. They get pushed into the new bracket. That's obvious. And let's say the person was in a refund position used to get refunds because they've got ra or whatever the scenario is. The wrong advice is to say don't get the increase and go into the new bracket because you're going to pay more tax and lose your refund. The fact of the matter is you still getting more money than what you, than what you wouldn't have before the increase. In fact the way and, and I just reversed the calculation. If instead of looking at how much extra tax you will be paying, reverse the calculation and say how much tax free money am I actually earning? So if you're earning an extra 100,000 and you jump into the new bracket and let's say the new bracket is 35%, you're still earning an extra 65,000. Right. If you say no to the increase you're actually losing out on that extra 65 that you wouldn't have that you wouldn't have had if you didn't get the increase. So say and you know another client was asking but you know, considering a job change where she was earning 800000 rand a year she was considering making the change to earning 1.1 but she was worried about the, the you know, I'm going to pay a lot more in tax. I'm going to say you're going to earn a lot more money.

**Maya Fisher French**: Yeah.

**Andre Bothma**: So there's this, there's a saying in the tax world and I, and I've been blowing that whistle for a very long time just on focally on X because people on X, you know it's this small group that would Anyway I'm digressing here for a bit but the saying is don't let the tax tail wag the investment dog. And you could apply that to various others. Don't let the tax tail wag the salary adjusted dog. Don't let the tax tail wag the immigration dog. Because now if you make your decisions based on tax, now, thinking of going to a place where you're paying less tax because now you're using tax as your decision making barometer Tax is a consequence of making decisions. You make your decisions but taking tax into consideration, it's not the reason why you're doing things now.

**Maya Fisher French**: And I think it is so such a brilliant statement because I also see people trying to do things to avoid tax and like you said often taking and doing the wrong investments because of tax. Do you have to tell you Andre, one of the biggest scams I always come across is when you ever come across somebody peddling a Ponzi, they usually have some tax free option in it and like the people here, oh I can get this money tax free and they fall for it. It like switches off their thinking brain. So telling people tax free is usually a big you know, a way to attract them. And as you said that's not necessarily the right decision but because I remember **00**: 10:00

**Maya Fisher French**: Andre, people asking me saying should I buy a more expensive car? Because then the tax deduction on my travel allowance or whatever will be, will be higher. Again, the wrong decision. The car's still going to cost you more money. Right?

**Andre Bothma**: Yeah. I think, I think in South Africa we also have a, we also have a perverse incentive to take tax efficient options that's not necessarily financially sound.

**Maya Fisher French**: Exactly.

**Andre Bothma**: And we're incentivized in South Africa to do that because of the, you know, they, when, when you, when you read papers and discussions and around. I remember when I was still working for employers there was this buzz around this idea of tax morality. But whenever tax morality is spoken of it's, it's spoken of the perspective of taxpayers submitting returns and paying their taxes. Tax morality is a two-sided coin. When you research what tax is, it is, it is money collected in exchange for public services provided. And so you can kind of understand that when you read that there's tax mismanagement or there's corruption in government that you, that you want to find ways to pay less. And, but, but again, you know, I want to caution at making stupid financial decisions just not just in order not to, in order to pay less tax.

**Maya Fisher French**: Absolutely. And I think that is important. And saying no to salary increase is really not a good decision. And I just, I pulled some numbers just to have an idea. But you know, for example, I think this is the important part to understand with this fiscal drag. So say for example you had 40,000 rand a month you were earning in 2023. If we adjusted for inflation, you should be earning around 44,000 rand a month in, by 2025, two years later. That's just a salary that increased by inflation. But you are now going to be paying about R.10,000 rand, more a year in tax. But remember you're now receiving 44,000 rand. So yes, per annum. you will be paying more tax but your salary and I work the offset. So your salary would, should have increased by 4,000 rand a month. if that adjusted the salary, the tax tables. But you're still going to get around 3,000 rand more a month. So it's not that you're going to get less than you were before. It's not like you. I'm just. I think that's important to understand, yes, you will still get the increase, but you won't get as much of the increase as you would have had they adjusted the tax table. So I think that's probably a good, a good way to explain it and maybe just to remove the confusion around this.

**Andre Bothma**: Yeah, I, think, I think when you. Again, that's why, that's why I simplified the mathematics behind. I. Behind. Only take, only taking into account the total Rand value that you're going to get your increase for and calculating the, that tax on, on. On the increase because then you can, then you can at least see what the, what the net result is. Obviously it's a bit easier to break it down into monthly and, but then you, but then you'll still get to the same, you'll still get to the same figures.

**Andre**: I think treasury became lax in finding ways to incentivize taxpayers more So. Yeah, I think it's just.

**Maya Fisher French**: I wanted to really chat you and explain that properly because I think even, you know, I think even I have been guilty of not making that clear enough in my article. So. And I was wrapped on the knuckles by a financial Planner, on LinkedIn about that. And I thought, okay, he's totally correct. We've got to be careful about how we're phrasing this so that we don't have people freaking out and saying no to salary increases. So yes, if your salary is increased by inflation, you will still get an increase. You just won't get the same increase that you would have had they adjusted the tax tables. But I do still feel, Andre, it's an important point to make because it is a stealth tax and we need to understand that effectively we're paying more tax than we should because I'm a little bit feeling. I feel like a lot of other people.

**Andre Bothma**: Yeah, but, but, but, but, but also I think, I think the. What's currently happening and this is, this is not a political, I'm not a politics guy, but I think sars, and Kieswetter especially Kieswitter about this budget that was done recently. Over the past number of years it's been. I think treasury became lax in finding ways to incentivize taxpayers more. You've, you've mentioned we just using one example, the adjusted tax tables for inflation. That's one example. You know, we did speak about the Why not adjust the exclusion for capital gains? Why not adjust the VAT registration threshold has been 1 million for the past 16 years. For the past 16 years. That's crazy to me. turnover **00**: 15:00

**Andre Bothma**: tax, that threshold is still same 1 million. It's been the same for, for 13 years. So there are interest 23,800 for good knows how long. So those small adjustments have been ignored and it's, I actually do want to chat to treasury at this year's tax indaba and because they are represented there and ask them why, why are those, those small? I mean, yes, they make a difference, but do they make, I mean it's really the tax tables, that's the big one that everyone talks about. But the, the real, the, the, the small incentives is going to help quite a few, especially the interest. I mean you've, if you've got a couple of hundred grand in there and then all of a sudden you go from paying tax on your interest to not paying tax on your interest anymore. and you, you need to earn quite a, you need to have quite a bit of money saved up in order to not pay, in order not to pay tax on interest. But anyway, there are a couple of examples. Also, yeah, the, there are a couple of things I want to talk about with regards to small businesses because online businesses, small businesses, the, the SBC Small Business Corporation, it still has a 3-employee rule for professional services. And these days it's so easy to hire a consultant, to hire somebody from Fiverr to do, to work with freelancers, to work with interns for a year who's not full-time. And you can, and you'll never qualify for SBC because you're not hiring people full-time. So there's a number of things that, that treasury can do but just don't.

**Maya Fisher French**: So Andre, I'm like a classic example of that. I have three people who work for me but they're all freelance, right? Because again you, I don't want the paperwork of full-time employees and all of that, that admin hassle. But they work, they have been with me for forever. but I can't claim or I can't, you know, I remain a professional service and I'm taxed, fully etc. Etc. So I think I agree with you, but I think you're going to go nowhere and I'll tell you why. When I was speaking to Chris Axelson 2 weeks ago on the national treasury, there's a couple of things he said to me. So first of all he did say to me, this wasn't actually on the podcast, we had a discussion at the budget itself and he said to me, you know, Maya, we couldn't go and increase the tax-free savings account minimum. You know, you can cap the 36,000 rand a year. it should be at 46,000 I think now if I do the maths, and if it's been adjusted for inflation, he said we couldn't do that and increase that because those are seen as benefiting the rich. Tax free savings accounts are only for rich people. That's how people perceive it. So now you're going to go and tell the poor that they're going to pay more vat but you're going to give more relief to people who have money to invest and save. So we're up against this optics in South Africa that any relief you give to anyone who isn't poor is anti-poor. And I think that's the rhetoric that you're up against. So anything that they are seen as giving a little bit more to people. Because if you think about the interest exemption and just by the way the other thing he said to me in that discussion is he said the interest exemption will never increase again because we are now replacing it with tax-free savings accounts. But tax free savings accounts are going to take a long time before you've amassed the kind of, of funds that you would have to have in an interest-bearing account right now before you, you hit the threshold. So you know, this is the way they're thinking but it is really is that we're not going to see any progression. I don't think for people, middle-class people who are feeling enormous burden. Middle-class people are the ones with bonds, they're the ones with car finance. They're the ones who've been hit by these high interest rates. They carry the biggest burden of tax. They carry the biggest burden of VAT. By the way, VAT falls heavily on people not in the top 4 decimals, not the poorest of the poor. And I think it's that constant. We're trapped in this narrative where it is anything that is, gives any relief to someone who actually earns a salary is anti-poor.

**Andre Bothma**: Yeah. For that and I'm not saying we need a President like they like to have in Argentina or a situation of USA with Trump. But it does then, it does then beg the question is, is what are, what are the options? Because what you see now is you see people who's who if you have, if you're 30 and you're having kids and you're thinking what are we gonna, you know, people are now deciding if I've got the means to. Right, let's say you're Middle class and you're doing fairly okay, but you're being hit in South Africa really hard. Like you're, like you're saying the decisions are made. My kids can go wherever they want in the world. **00**: 20:00

**Andre Bothma**: What people are. And I think work. And May mentioned this. The concept of a country no longer exist. People and the freedom to work and go wherever you want. People. The new economy is digital and work from anywhere. So a lot of young people who's got, who might have the ability, whether you're in tech and finance or whatever, whatever your scope is, if you, if, if you're, if you're born in the right circumstances, unfortunately in South Africa and you have the means, the option, the UK is sitting with the exact same problem. People are exiting UK in droves because of a tax system. And where are they going to countries where they are inviting digital nomads and the tax rates are lower. So, and, and, and South Africa is is actually a tax haven for digital nomads because they just make sure that they aren't enough days inside SA and they tax residents somewhere else. So they spend just under six months in South Africa, but they tax resident in Malta. And so what you're going to see, at least in the next 20, I don't, I don't care what treasury decides in terms of, you know, okay, but we can't do this because of that. the people with the options are going to leave if it doesn't improve dramatically.

**Maya Fisher French**: And I think, you know, one, thing I do want to say in the defense of South Africa is that our tax rates aren't as high as some other countries. I mean we're not at the highest in the world by any stretch of the imagination. And I actually know, where I live in Cape Town, there are a lot of, of swallows who come here for that exact reason. Because actually it is, and I was speaking to an Australian, recently, I was at a conference with him and he was saying, oh, I believe there's been an uproar about your 2% increase, percentage point increase in VAT and what is your VAT rate? And I said, well it's currently 15%. And he said what? That's so low. So actually by world standards we have a very low VAT rate, which is interesting. So, so I think there are, we do need to understand South Africa, the context of South Africa, in terms of our taxation. But I think what people are frustrated about is that it does feel that people are taxed sooner in Other words, you don't have to be earning a lot before you are paying quite significant taxes. and then I think we're seeing a tax morality issue. We are seeing people saying, and I remember so clearly, when Trevor Manual was Finance Minister, Pravin Gordon was the Commissioner of sars. I was a journalist, I was interviewing them and we saw this huge increase in people joining the tax net. A large part of that was because they believed it was the right thing to do. They wanted to be part of a country that was, you know, growing and developing and equality. They bought into that. And you will remember that Trevor Manual ran a surplus. We ran a budget surplus in those days. So people felt that their money was being used effectively, they didn't have a problem paying tax. And we're seeing that massively reversed. So I think there is a little bit of that in all of this. I think if we saw everything working efficiently. If I wasn't having the problems I'm having with home affairs right now, and you know, and, and blackouts and load shedding and I think if we weren't experiencing all of that we'd probably be less resentful about the tax rates.

**Andre Bothma**: I think an important point to make enough, and I haven't made this point on social media yet is if you want to be a high tax country, you cannot have a high corruption country at the same time. the countries where the tax rates are the highest, and I'm specifically referring to the Scandinavian countries there you have extremely high tax morality but extremely high tax rates. and so you can't have both at the same time. If you want to have high corruption you have to have lower taxes otherwise the people leave. I think immigration numbers have increased dramatically. The number of people asking me to do tax and immigration checks is high. cease to be resident is increasing. I've done over 70 applications since starting. Since starting Ihafu. People are working for overseas companies because companies are audited less than individuals People, people are And but what is more is people are. A lot of people are no longer taking full time positions where they are working for South African companies. What's increasing now more because of the personal tax issues is people are. People are working for overseas companies and charging them as a company because companies are audited less by SARS statistically compared to individuals. if you are under a certain turnover threshold or assets threshold and sure. So you know, but I think individuals are feeling the brunt. And yeah, again **00**: 25:00 you, you make the point that we are taxed less compared to. But, but on the flip side, what do people do? People actually get something for what they're paying for. And so in South Africa I think you can make a fair argument that, I mean look at Johannesburg. Somebody tweeted the other day, I think her name, she's also a journalist, she said I don't want to move to Cape Town. I just want Joburg to be better.

**Maya Fisher French**: Yeah, I know, there's actually was a radio show and I was listening today to people who are some that people have moved to Cape Town from Johannesburg, are moving back to Johannesburg simply because they can't afford to live in Cape Town because the property prices are so high here. But they, you know, they exactly what they said. We love Joburg, we want to be in Johannesburg, but you know it needs to be working. So I think there is that. That is quite a big issue. The biggest growth in employment is in the self-employed space But I also, you know you were talking a little bit earlier about digital nomads and self-employed people. And I know you and I have had this discussion before where the biggest growth actually in employment is in the self-employed space. There are less and less people joining corporates. I think that's another area where tax is not keeping up with the tax legislation. And you know what quite frankly Andre products as well, you know all these products that are there all linked to any. I find the financial industry is also so narrow focused on corporate earning people, people who earn a regular salary and lending home. You and I discussed home loans. I've written an article about you on my discussion around home loans. You know, do you think we really need to start seeing a huge shift in the mind, the thinking both of national treasury but also our financial institutions that actually going forward you need to start accepting that more and more people are going to be self employed or.

**Andre Bothma**: Have their own businesses 100%. I think the one thing that is frustrating to me is AI is taking over and AI agents. So the need to employ more people and the ability for individuals to earn what they used to earn at corporate is dramatically increasing. So your solopreneurs, people working for themselves and also working from home. The working-from-home thing has not been adjusted. The tax law hasn't changed around that. But you finding that more people working from home, I think you know a forward-thinking treasury would consider adding in the small business section if you're in fintech, if you're in tech, if you're doing AI things, if you're in that space you can fall into the small business corporation section. So and they are, you know, because there's that rule, the personal service provider rule which prevents a, a person working in corporate to quit their job and charging the company a you know, as a company because you know that's a personal service provider. But now you have some smart folks who said well okay take them on as a client and just get a second client and charge that. And now you have two clients and you don't you, you fall and all of a sudden you turn yourself from a normal employed individual to a self-employed solopreneur with two big clients and you're earning double what you used to earn and the tax is only 27%. A lot more people are doing that and like I said I think the also creator economy is, is also growing. Sure. In South Africa people doing stuff on YouTube and TikTok and, and even on X, you know the, the number of people earning additional income outside of employment that's also increasing. So but yeah so definitely a forward, a more forward thinking budget would have been, would have been preferred. And I think the next five years we still thinking like ah. I think the other thing, sorry to digress again the 67 code manual where you have all the codes of industries right that Stats SA have to categorize what type of business do you have? It hasn't been updated in years. I can't remember the exact year it needs to be updated because there's the things in it is not there. Things in AI is not there. Web development stuff is not there. And that is where you know in a week's time all these chatbots and AI agents is already new and updated and new things happening and the world is going there and we're South Africa is, is falling behind. Unless you're on it.

**Maya Fisher French**: Look, I mean I think one thing you know when I speak to treasury and you see that, you have to see that we haven't passed this budget yet. By the way the day that you and I are talking today we haven't passed this thing. So there's massive political stuff going on. It's probably the last thing in the whole world they have the time for is to, to review this. And I do think that we're not, I think realistically you're not going to see anything that is going to allow that tax base **00**: 30:00 **Maya Fisher French**: to seep any further. I think they are absolutely terrified of losing any more taxpayers or leakages in the system by allowing more tax breaks. I think we're going to see anything, I'm going to see the opposite of anything they're just tightening down. I mean SARS was given an additional 4 billion, which means that they, I think, will have seven and a half billion rand over the next three years to find taxpayers. That's actually what they've been given the money for. It's to go after people who owe them money, people who have not handed in their tax returns but also develop further AI to find tax avoidance. So I don't think we're going to get a lot of relief. I think if anything we're going to have a lot more scrutiny from SARS going forward.

**Andre Bothma**: Yeah, I mean I think that, that's what To, to, to be honest, the, the, then there's a couple of, and I call them SARS Blind Spots. I'm working on a book which is kind of a layman's guide to to taxes and one of one of the chapters I'm working on is called SARS Blind Spots. And one of SARS's blind spots is cash-run businesses. I was on a, somebody some, somebody from Africa, I think they're from Nigeria. Can't remember which publication asked me about the taxi industry and how little tax they pay compared to their earnings and simply you know do you make a card payment when taking a taxi? No you don't. You pay cash. And so the, the actual people, the, the actual businesses where SARS can look at and find money is cash. They will find more money than what they'll know what to do with going after cash run businesses. End of story. Like I'll, I will and I'll repeat this until they, until they actually decide okay, you know what? We, we, we, we gonna have to do something.

**Maya Fisher French**: Well you know the fastest way to bring cash, cash-based businesses into the tax net is VAT. So that was of course one of the other strategies. You increase VAT by 2% and those cash businesses are you know at some point they're buying goods and services that are vatable. So it's that was one of the other ideas was that they will tap into more into the cash-based. So, so the, this thing is challenging but you're quite right. I mean the there, there are a lot of people who are not paying tax who should be paying tax and I think if everybody was paying tax who should be possibly there'd be room to reduce taxes which of course would be very nice. But I don't know if, I don't know where we're at in the country whether they would reduce tax or spend more.

**Andre Bothma**: Yeah, I mean, but the issue of finding more taxes is the place where most of a tax is found, which is standard employment. That's just statistically true. So you know, and whether those, whether those individuals are compliant or not doesn't matter. They're still collecting the pay as you earn from them. So it is not individual tax that actually is where the tax must be found.

**Maya Fisher French**: Yeah, exactly. And I think the point.

**Andre Bothma**: Individuals are paying the tax.

**Maya Fisher French**: The individuals are paying the tax. It's the people who are not receiving formal. And as you, we were saying earlier there's gonna be less and less people earning formal salaries because people are leaving the formal industry. So there's. Yeah is I think, I think treasury and stars have their work cut out for them. But I want to, before we, I want to just sum up with some key points for the listeners around their, the opportunity not to pay tax legally. So you mentioned obviously your, your retirement savings. That's the kind of obvious one and it was very interesting that that was one of the things that treasury looked at. They said should we reduce the cap? So right now you can contribute 27.5% of your salary tax free and it's capped at 350,000. That was on the table, that was on the table to possibly cut those tax exemptions. Thank goodness they didn't because I think that would have been, would have been an uproar. we have medical tax credits which they have not adjusted for inflation. So that's another way of not giving us a tax credit, but you do at least get one. what other ways do we have? I mean if you're a self-employed person, what is it like to be able to deduct home office expenses? I know that that's become more, but it has been clamped down.

**Andre Bothma**: Yeah, I'm going to be honest. If you, if you're full time employed and you're trying to claim home office, don't even try. because the effort and Keith Engel, CEO of SAIT said this. If it's, if it's hard for SARS to approve, they'll disallow it. And so it's easier if you're self employed or you're a commission earner, independent contractor, you can claim expenses and it's easier to claim home office expenses. But know that you are, that you are, that you fall into SARS's orange and red category which is easier to audit. **00**: 35:00

**Andre Bothma**: individuals who are full-time employed. Obviously, if you get a travel Allowance, keep a logbook and you can write off the travel deduction. and then all what's left is pension, provident fund and ra. RA is an after tax deduction that you decide that you're going to do after you've gotten your salary. And provident fund and pension are pre-tax which is obviously better. But not a lot of companies, most corporates. A lot of corporations will have pensions, but a lot of small businesses don't.

**Maya Fisher French**: But I just want to clarify. Sorry. On the RA being after tax. So it is. You get paid your salary, then you invest in the RA and then you get a rebate. So you do get your tax back. It is tax deductible. I mean certainly I use that. at the end of the year I top up on my RA and I always make sure that I try not to get a tax rebate because that always. You don't want to trigger an audit. So. But yeah, RA is generally done. But you get the money as a rebate.

**Andre Bothma**: Yeah. And but, but, but to be honest, the, that is the, that is actually the only deduction available to individuals. medical aid. Medical aid is, is not. You have to have medical aid or you have to go for public health care which is, you know, my mother in law have to wait, I don't know for how much she had to wait just for an appointment, to get a consultation in order for an operation to happen at some point. You know it doesn't work like that if you have private health care the second. So medical is not a tax deduction. You either have it or you don't. donations is a benevolent choice. It's not a tax deduction. You choose whether you want to give to the SPCI or not. It's not a tax deduction. The tax deduction is just a. Oh, congratulations, you gave to the spca. The only one, the only real tax deduction is RAs and, and pensions. So there are no, outside of RAs, there's no other tax tool for individuals.

**Maya Fisher French**: So there is none. I just want to clarify because a PBO or a public benefit organization, can be a deduction. It is.

**Andre Bothma**: So it is a deduction.

**Maya Fisher French**: But you've obviously had to pay away. So it's not like you're benefiting from it. You've said I'm going to give a hundred thousand rand to the SPCA that is taken off your taxable income, but you still have handed 100,000 rand over to someone.

**Andre Bothma**: Yeah, yeah, exactly. and the deduction, you know, if your tax rate is correct. If your effective tax rate is 30% and you donated 100,000, you get, you can write off 30,000 on your tax bill. But again, that is a consequence of you just giving. It's not a, I can't Andre, what tax advice will you give me? And I'll say, okay, you've maxed out your RA. I can't tell the person to donate to a pbo. That's not tax advice. That is their choice. It's, it's a benevolent choice. M. it's not, it's not tax advice, you know, it's education. Yeah, you'll get a, you'll get a write off if you donate to a pbo, but it's still the taxpayer's choice. So from a taxpayer's choice, the tax option, individuals who are full time employed have no options other than the RA to actually a meaningful deduction.

**Maya Fisher French**: I think one way to look at a donation is to say, I, don't feel that my tax is being used as efficiently as it could and I feel that if I gave it to this public benefit organization, my money would be better spent. And that could be another way of kind of thinking about it, I suppose. But ultimately you're right. It's not a, you know, I'm going to save myself money.

**Andre Bothma**: Yeah. But it's also a percentage off. So people think, oh, okay, If I owe SARS 50, 50,000, can I just donate that 50,000? I'll say, no, if you donate 50,000, only 30% of it will reduce. So, so, so that's also, when, when people say I would rather pay. Yeah, I would rather donate the taxes than pay sauce that doesn't work. as a company, if you want to pay a service provider, that is, that is a, Obviously that is 100%, but still it's a percentage of, so, you know, comp, you know, I'm very careful, I'm very careful to advise doing things to pay less tax by reducing your, your net profit as a business. Because that's not smart business decisions. you, you, you, you, you get the service providers that you want and you pay and, and you pay their fees. You see? Good. Don't let the tax tail wag the business dog with your financial planning Again we come back to that conversation is don't let the tax tail wag the business dog.

**Maya Fisher French**: Absolutely. I think it's, **00**: 40:00 **Maya Fisher French**: that is important. But there are obviously some basic tax, you know, healthy tax, behavior to do which is, you know, use your contributions, retirement fund. You still will be by the way taxed at retirement. But you know, you can at least, at least postpone that taxation. And of course the other one that I love is your tax free savings account. yes, it's with after tax, income, but it's, you know, it's really great to be able to take that out of retirement tax free. So I think there are, you know, the ways of financial planning, let's put it that way you can be efficient around your financial planning. So I think that, that, that is some, some good advice.

**Andre**: I don't see South Africa getting any tax relief anytime soon But Andre, it's been such a great conversation. and I think we've, we've given some of our personal views on the whole, the whole tax, yeah, the whole tax position in South Africa. unfortunately, sadly, I don't think treasury is going to be listening to us. they have promised something on tax free savings accounts next year and I think they're going to have to look at the whole taxation of investments and exemptions again. but again I just, Andre, I just don't see us getting any tax relief anytime soon.

**Andre Bothma**: Yeah, I think the GNU, because it's so young, I think politically we in for an interesting for next four years because whatever happens, I mean this year we only we're not three months in and already you can tell that South Africa can no longer do politically whatever it feels like without the world taking notice. **Maya Fisher French**: Yep, interesting times, for our I think globally, locally and for our finances. I think that's, that's definitely the answer. So thank you, Andre. **Andre Bothma**: No, it's a pleasure. **00**: 41:42