1. Retirement Fund Contributions:

Amendment to section 11F(2)(a) of the Income Tax Act: From 1 March 2024, the total allowable deduction for retirement fund contributions in any year of assessment shorter than 12 months should not exceed R350,000 across the 12-month period from 1 March to end-February of the following year.

Example:

• Taxpayer A ends residency on 31/07/2024:

• Year of assessment 1. (01/03/2024 - 31/07/2024): Allowable deduction is R200,000.

• Year of assessment 2. (01/08/2024 - 28/02/2025): Allowable deduction is R150,000, calculated as R350,000 minus R200,000 used in the first assessment year. Excess contributions are carried over to the 2026 year of assessment.

2. Tax-Free Investments:

Amendment to section 12T(4)(a) of the Income Tax Act: Where a person’s year of assessment is less than 12 months, the contribution limitation - currently R36 000 must also be proportionately adjusted. The annual contribution limit has been adjusted. Where a person's total contributions exceed R36,000 during a tax year, a 40% penalty will apply to the excess.

Example:

• Taxpayer A ends residency on 31/07/2024:

• Year of assessment 1 (01/03/2024 - 31/07/2024): Contributions to a tax-free investment total R20,000; no penalty applies.

• Year of assessment 2 (01/08/2024 - 28/02/2025): Additional R30,000 contributed, totaling R50,000 for the year. Excess of R14,000 over the R36,000 limit incurs a 40% penalty, totaling R5,600.

3. Urban Development Zone Deductions:

Update: The period for claiming deductions on the erection or improvement of buildings in urban development zones is extended until 31 March 2025.

4. Solar Energy Tax Credit:

Specification: This credit, available only for the fiscal year from 1 March 2023 to 29 February 2024, offers a 25% deduction on the cost of new and unused solar PV panels, capped at R15,000.

Example:

• Taxpayer B installs new solar panels on 01/05/2023 at a cost of R60,000. The tax credit available is 25% of R60,000, capped at R15,000.

5. Renewable Energy Production Incentive:

Incentive Design: Allows a 125% upfront deduction on the cost of new and unused assets used in generating renewable energy, applicable until 1 March 2026.

Example:

• Company C invests R4 million in eligible renewable energy machinery on 01/06/2024. They can claim a deduction of 125% of the investment cost, amounting to R5 million.

ITR12 Form Changes and Notes for Tax Practitioners:

The ITR12 form has been streamlined to ease the completion process, particularly regarding foreign employment income and beneficial owner details. It is crucial for Tax Practitioners to accurately input the taxpayer's details, not their own, to avoid any inaccuracies in submissions.

These changes aim to clarify and simplify tax filing procedures, ensuring better compliance and understanding of new regulations. Accountants should familiarise themselves with these updates to provide accurate guidance to clients as the tax season approaches.

For more information on the tax filing season visit the SARS website.