7 Overlooked Tax Deductions That Could Boost Your Bottom Line
Staff Writer • 2025-02-12
Navigating tax season can be a daunting task for business owners, especially those unfamiliar with the nuances of available deductions. Failing to claim legitimate tax benefits can mean leaving significant money on the table. Nadine Augustine, a seasoned QuickBooks accountant and founder of Zen Accountants in Pretoria, highlights seven often-overlooked tax deductions that could substantially impact a business's financial health. Mrs. Augustine emphasizes the importance of working with a professional to ensure that all eligible deductions are claimed. “It’s difficult to estimate precisely how much people underclaim, as deductions depend on personal circumstances. The higher your income, the higher the tax refund could be. However, I see many business owners leave money on the table because they don’t keep accurate records or aren’t aware of the available tax incentives,” she says. Maintaining meticulous records throughout the year is key to maximizing tax savings. “Without proper accounting systems, many business owners scramble at year-end and miss crucial deductions. Tools like QuickBooks can streamline the process, providing a clear view of income, expenditure, and opportunities to save,” Mrs. Augustine adds. 1) Solar Tax Incentive With South Africa's push for renewable energy, tax incentives exist for individuals installing solar power. Taxpayers who install new and unused photovoltaic (PV) panels can claim a rebate of 25% of the cost, up to R15,000, against their personal tax liability. However, this benefit was only available from 1 March 2023 to 29 February 2024. For businesses, the incentive is even more generous. “The South African government allows businesses to claim 125% accelerated depreciation in the first year for renewable energy installations, including solar PV systems. This means the full cost of the solar system can be deducted from taxable income. It is only claimable for renewable energy assets brought into use for the first time between 1 March 2023 and 28 February 2025. This incentive, often underutilized, can make a big difference for businesses investing in sustainable energy,” Mrs. Augustine explains. 2) Medical Expenses Many taxpayers overlook out-of-pocket medical costs that aren’t covered by medical aid. If properly documented, these expenses can be claimed under the Income Tax Act. “Many people don’t keep medical receipts. I recommend listing the pharmacies and doctors visited most frequently and requesting statements for the tax period from March 1st to the end of February,” says Mrs. Augustine. 3) Charity Donations Donating to registered Public Benefit Organisations (PBOs) can reduce taxable income, provided the donations meet South African Revenue Services (SARS) compliance requirements. “Many business owners don’t know they can claim donations to registered PBOs as tax deductions. You can save on your taxes by doing good, like donating to charity. With the proper documentation, this incentive is worth exploring,” says Mrs. Augustine. 4) Tax-Free Investments Business owners often miss out on tax-free investments (TFIs), which allow individuals to grow their wealth without paying tax on interest, dividends, or capital gains. “Tax-free investments are a great option for personal wealth growth. TFIs typically include unit trusts, exchange-traded funds (ETFs), and fixed deposits offered by banks. However, it’s important to note that business funds cannot be invested in a TFI, only business owners can invest personally,” Mrs. Augustine clarifies. 5) Retirement Annuity Contributions Retirement annuities (RAs) provide a powerful tax advantage by reducing taxable income, but many business owners fail to maximize this benefit. “For example, if you expect to owe R40,000 in taxes, you can invest in a retirement annuity before the end of February to offset that tax liability. The maximum annual contribution is R350,000, or 27.5% of your taxable income, whichever is lower,” Mrs. Augustine explains. 6) Financing a Vehicle Certain business-related vehicle expenses can be deducted, yet many entrepreneurs fail to take advantage of this. “You can claim deductions for finance costs, depreciation, and operating expenses, provided you have the right documentation. Many business owners overlook this tax deduction, which can yield substantial savings,” says Mrs. Augustine. 7) Side Hustles Operating at a Loss If your side hustle is running at a loss, it can be used to offset your taxable income and reduce overall tax liability. “Another common missed opportunity is when people running side hustles don’t report their losses, which can reduce taxable income and lower your overall tax bill. Many mistakenly believe losses are irrelevant and don’t report them, but accurate records and reporting can significantly lower your tax bill,” says Mrs. Augustine. Final Thoughts Tax season doesn’t have to be a burden. With careful planning and professional guidance, business owners can capitalize on often-overlooked deductions to reduce their tax liability. “Understanding the tax incentives available to you can make a significant difference. Keeping meticulous records and consulting a financial professional can ensure you claim what you’re entitled to,” Mrs. Augustine advises. With tax laws constantly evolving, staying informed and proactive can turn tax season into a strategic opportunity rather than a financial headache.
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