Tax for Pensioners Presented by: Penny Smith

Page 2 Who has to complete and submit a return? 1.Remuneration in excess of R Other non-remuneration income 3.Loss from previous year of assessment due to:  Medical expenditure  Retirement annuity/income protection which can be set off against future years earning > R from a single employer 4. More than one source of remuneration with income < R (from 2012)

Page 3 Documentation required to complete your return 1.Tax certificates 2.Bank account details 3.Certificates received for:  Interest (local and foreign)  Foreign dividends 4.Documents relating to medical expenditure:  Income tax certificate from medical scheme  Proof of qualifying medical expenses not recovered from medical scheme  Completed confirmation of Diagnosis of Disability form (ITR-DD) 5.Income tax certificate for Retirement Annuity and Income Protection policies

Page 4 Documentation required to complete your return- continued 6.Travel allowance or company provided vehicle – logbook required 7.Capital gain transactions both local and foreign 8.Commission income – receipts of expenditure and logbook for travel 9.Letting of assets 10.Financial statement for trading and farming activities 11.Any other income or deductions declared

Page 5 Employment status If unemployed for the full year of assessment without any income or no capital gain/loss REMEMBER if you:  Incurred any medical expenditure (including contributions) or  Contributed towards a Retirement Annuity Fund THEN - You have to declare such expenditure as it may be carried forward to future years where you may make use of:  the loss created for medical expenses or  deductions for your Retirement Annuity Contributions that do not qualify for a deduction in the current

Page 6 Medical – Tax credits

Page 7 Taxpayer aged 65 years and older and Taxpayer under 65 with a disability 2014 Deduction (reduces taxable income) Deduction amount:  Full medical scheme contribution  Other qualifying expenses  Physical disability/impairment expenses (sect 18) 2015 Medical tax credit (reduces tax) Medical tax credit amount:  Standard medical scheme credits (sect 6A)  33.3% credits fees for medical scheme fees > 3 x standard credits (sect 6B)  33.3% credits for all qualifying medical expenses (excl scheme contributions (sec 6B)

Page 8 Taxpayer 65 years and older Mr Taxpayer is 65 years old. For the year of assessment commencing on 1 March 2014, he made contributions to a medical scheme of R2 000 p.m. on behalf of himself and his wife. By 28 February 2015 he had incurred R in qualifying medical expenses.

Page 9 Taxpayer under 65 with a disability Mr Taxpayer is 34 years old. For the year of assessment commencing on 1 March 2014, he made contributions to a medical scheme of R on behalf of himself, his wife and their child. By 28 February 2015 he had incurred R9 232 in qualifying medical expenses and also paid R for two hearing aids for his child who is regarded as disabled. Mr Taxpayer’s taxable income before the medical deduction is R for the 2013 year of assessment

Page 10 Taxpayers under 65 years with no disability 2014 Deduction amount limited:  Full medical scheme contribution  PLUS Other qualifying expenses  Exceeds 7.5% of taxable income 2015 Standard medical tax credits – plus 25% of below aggregate total of: The sum of:  Standard medical scheme credits (S6A)  PLUS 25% of medical scheme contribution > 4 x standard medical credits  PLUS Qualifying medical expenses  LESS 7.5% of taxable income

Page 11 Taxpayer under 65 with no disability Mr Taxpayer is 34 years old. For the year of assessment commencing on 1 March 2014, he made contributions to a medical scheme of R on behalf of himself, his wife and their child. By 28 February 2015 he had incurred R9 232 in qualifying medical expenses and also paid R for two hearing aids for his child who is regarded as disabled. Mr Taxpayer’s taxable income before the medical deduction is R for the 2013 year of assessment

Page 12 Physical impairment  Expenses can be claim for the Taxpayer, spouse, child or dependant  A disability that is less restraining than a ‘disability’ (S6A) – the restriction of the person’s ability to function or perform daily activities after maximum correction is less than a ‘moderate to severe limitation’. Maximum correction in this context means appropriate therapy, medication and use of devices. (e.g. bad eyesight,  The amount incurred but not recovered from the medical scheme is allowed to be claimed providing proof of payment of such expenditure is available and kept for 5 years after submission of the return.

Page 13 Disability  The Act provides for a more widely accepted and understood definition of ‘disability’ instead of the previous term ‘handicapped’. A person who qualified as a ‘handicapped person’ in the past must have his disability re-confirmed in order to continue to claim a deduction.  ‘Disability’ means a person with a moderate to severe limitation of the ability to function or perform daily activities, as a result of a physical, sensory, communication, intellectual or mental impairment if the limitation:  Has lasted or has a prognosis of lasting more than a year; and  Is diagnosed by a duly registered medical practitioner in accordance with the criteria prescribed by the Commissioner.  The disability must be confirmed by a duly registered medical Practioner and a form ITR-DD must be completed (Confirmation of diagnosis of disability form for an individual taxpayer)  If the disability is not confirmed –the qualifying expenses will not be allowed in full and will be subject to the 7.5% limitation  Refer to the “list of qualifying physical impairment or disability expenditure’ document on the SARS website

Page 14 Physical impairment vs Disability Physical impairment Disability  Bad eyesight  Hearing problems  paralysis of a portion of the body; and  brain dysfunctions such as dyslexia, hyperactivity or lack of concentration. Diabetes and asthma are recognized as medical conditions and not as physical impairments. C o Refer to Guide on the determinations of Medical tax credits and allowances on the SARS website

Page 15 SARS Practice Note: No 37 Taxpayers whose income consists solely of remuneration and/or interest and dividends will be entitled to a tax deduction in respect of fees paid to accountants, bookkeeper, tax consultants and other professional persons or Institutions for the completion of their tax returns subject to the following qualifications  No deduction will be allowed against remuneration, but if the taxpayer’s receives commission it will be allowed  In the case of a pensioner whose financial affairs (pensions, annuities, investment income, etc) are administered by a banking institution, board of executors or similar institution the administration fees, including any fees for the completing of tax returns, paid to the Institution will qualify for deductions  Only fees actually paid will be allowed as a deduction We therefore advice you to have your tax done by an Institution that will let you pay to SARS what is due – NOT more or NOT less and deduct the fees you pay!! Awaiting feedback from SAIT (South African Institute of Tax Practitioners) if we qualify as a “Similar Institution”

Address:1 Deo Clementia Chickweed Street Annlin 0182 Address:19 Silver Lane Mayfield Park 2091 Johannesburg Branch: Pretoria Branch: Contact Details: Penny Smith – Executive Director: Payroll Services Carien van Dijk – Executive Director: Tax Services Jonathan Shelver – Office Administrator