General Exemption and Deductions


Interest and foreign dividend exemption

Investment income derived from interest and certain foreign dividends:

  • For taxpayers under the age of 65: R22 800
  • For taxpayers aged 65 and older: R33 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.

Interest 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

Younger than 65 years:

Medical aid contributions may be claimed as a credit against tax payable as follows :

  • R230 per month each for the taxpayer and the first dependant
  • R154 per month for each additional dependant

Other medical exenses which may be claimed as a deduction against taxable income include:

  • so much of the medical aid contributions made by the taxpayer of or employer as exceeds four times the medical credit limit
  • other qualifying medical expenses

The taxpayer may deduct the other medical expenses to the extent that it exceeds 7.5% of taxable income before this deduction and any retirement lump sum benefit

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, without the 7.5% limit.

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.

As from 1 March 2010 the full contribution by an employers is a fringe benefit.

The fringe benefit has no value where the contribution is in respect of:

  • an employee retired due to superannuation or ill health
  • dependents of a deceased employee