Compliance

An accountant’s top tips for Tax Year-End

This Tax Year-End, rather than focusing on cutting your tax bill, focus on growing wealth. Discover nine strategies to get you started.

Feb 12, 20266 min read Share

It’s that time of the year when many entrepreneurs explore ways to limit their income tax liability before the 28 February deadline.

Rather than focusing on cutting your tax bill, I propose a different strategy to my clients:

Focus on growing wealth and use the Tax Year-End time to review your financial situation and make changes, if necessary.

In this article, we highlight nine things to think about to reduce your tax bill and grow your wealth.

Here’s what we’ll cover

1. Grow wealth by reinvesting your RA tax refund

I’m not the biggest fan of Retirement Annuities (RAs), but they serve some people well.

You can claim up to 27.5% of the greater of remuneration or taxable income as a retirement fund deduction, capped at R350,000 in the 12‑month period from 1 March to end‑February.

If your year of assessment is split, SARS aggregates deductions across assessments in that 12‑month period.

Reinvesting any tax refund triggered by RA contributions can boost your total annual contributions, but it is not an investment return—it’s a cash‑flow benefit from tax relief.

2. Getting too creative with tax deductions could end up costing you more

Only buy assets (like vehicles) when they improve delivery or efficiency.

Year‑end purchases purely to cut tax often reduce cash unnecessarily.

Consider total cost of ownership and how allowances, wear‑and‑tear, and business use apply in your case, then invest when the business case holds.

This is why you shouldn’t use saving tax as your only motivation to purchase a vehicle. But if it’s going to reduce the cost to serve your customers, then it’s a solid investment.

3. SARS is wary of travel claims

There are various types of travel claims:

• A travel allowance as part of a salary structure
• A fringe benefit on a company car
• The use of vehicles to conduct business and generate income.

Whatever your situation, you need to keep a logbook.

This is non-negotiable.

Recently, SARS audits have been particularly focused on travel claims, which is understandable with the world shifting to remote work and international travel grinding to a halt.

If you’re audited, these are the documents you’ll need to provide SARS:

Detailed travel logbook.

Keep a SARS‑compliant logbook:

• Record your opening odometer on 1 March and closing odometer on the last day of February.
• For each business trip, note the date, kilometres travelled, where you started, where you went, and the reason for the trip.
• Remember: home‑to‑work commuting is private travel and cannot be claimed.

Use the 2025/26 SARS e‑Logbook template to standardise records.

Purchase finance agreement for your vehicle

If you paid cash, you’d need to provide the invoice, proof of payment, and RC1 (registration document).

If you used a vehicle registered in someone else’s name

Attach a written statement by that person confirming that you may use the vehicle.

The above may sound like a mountain, but it’s merely a habit to get used to – one that will save you many taxes annually.

4. ETI: A valuable tax relief for eligible small businesses

The Employment Tax Incentive (ETI) is probably the most effective tax hack for small business owners.

It’s often one of the first conversations I have with my clients.

You may claim Employment Tax Incentive (ETI) for qualifying employees who:

• Earn monthly remuneration less than R7,500 (cap increased from R6,500 effective 1 April 2025).
• Are 18–29 years old (age rule doesn’t apply for certain roles in Special Economic Zones, if other requirements are met).
• Have a valid SA ID, Refugee or Asylum permit.

Speak to your accountant for guidance on how to claim the ETI.

5. Use Tax-Free Savings Accounts (TFSA) benefits

Tax-Free Savings Accounts (TFSAs) offer tax benefits to investors because you don’t pay tax on dividends, interest or capital gains.

This investment scheme requires after-tax money to be invested, with no deduction on your deposits.

The annual TFSA contribution limit is R36,000 and the lifetime limit is R500,000.

If your year of assessment is less than 12 months, SARS pro‑rates the annual limit for the Mar–Feb period.

Exceeding the annual limit triggers a 40% penalty on the excess

6. Capital gains tax consideration: Stretch the sale

Individuals receive an annual capital gains tax exemption of R40,000.

If you are considering selling your business, try to structure the transaction over two income tax periods. In doing so, you can use the capital gains tax exemption over two years for one transaction.

When selling shares or property during this period, consider making the sale date from 1 March and not before 28 February.

Doing this will postpone capital gains exposure and the impact on your cash flow.

This tactic also allows you to generate additional income with the capital on hand before you need to declare provisional tax.

7. Pro bono work for charities

Section 18A deductions apply to bona fide donations in cash or qualifying property in kind to approved organisations.

Services (pro bono work) are not deductible and cannot be receipted under Section 18A.

If you donate money or qualifying property, ensure the organisation is Section 18A‑approved and that the receipt includes the mandatory details.

You will be able to deduct 10% of your taxable income on all donations to PBOs.

A few things to note about this:

• Not all PBOs may issue Section 18A certificates. They must be separately approved by the SARS Tax Exemption Unit. Confirm this status with the charity you are working with.
• The Section 18A certificate must include the PBO’s reference number, date of receipt of the donation, name and address of the donor, and the amount or nature of the donation.

8. Net losses from part-time businesses

Many part-time entrepreneurs (employees who also have side businesses) tend not to declare their secondary income for tax purposes, either because they think it’s irrelevant or are scared about the potential consequences on their income tax return.

To be clear: it is compulsory to declare any additional income from any business source.

My experience is that most of these businesses have a net loss in the first one to three years. This is mainly because the company is constantly evolving and growing, which requires input capital.

Declare all secondary business income and expenses.

Early‑stage losses may reduce your tax, but SARS can ring‑fence losses under section 20A for certain suspect trades and in specific circumstances (for example, if you’re taxed at the maximum marginal rate and the activity shows signs of hobby‑type use).

Seek advice to confirm whether your trade qualifies and how to substantiate intent to make a profit.

This needs to be discussed with your tax consultant.

9. Conduct a financial health assessment

Whenever my team meets with a new monthly accounting client, we do a financial health assessment with SARS and the Companies and Intellectual Property Commission (CIPC).

These are some of the things I look out for:

• Have the CIPC annual returns been submitted, and are they up to date?
• Are there any outstanding tax returns for the company or its directors?
• Is there any debt owed by the company or its directors?
• Does your company qualify as a Small Business Corporation (SBC), and are you applying the current tax bands?
• Can we use the Employment Tax Incentive on the payroll?

Final thoughts

Preparing for and complying with Tax Year-End can be stressful for small business owners.

But it’s a good time to zoom out and take stock of your finances and look for opportunities to not only reduce your tax burden but also grow your wealth.

Editor’s note: This article was first published in February 2022 and has been updated for relevance.