Taxman will let doctor deduct professional dues

Textbook cases

I AM a medical doctor working in a state hospital.

Where and how do I deduct subscriptions to the Medical Association of SA (Masa), the Medical Protection Society (MPS), the SA Medical Doctors Council (SAMDC), and the cost of textbooks acquired?

I am also a member of the Professional Provident Society (PPS). Are contributions to this fund tax deductible?

Eras Reyneke, a tax consultant with KPMG, replies: Contributions to Masa and SAMDC are deductible for tax purposes provided membership of these councils is a prerequisite for holding the position, which is true in your case.

Regarding contributions to the MPS and the PPS, in practice the Receiver allows as a deduction the premiums paid by an individual on policies that provide for compensation of the insured because of loss of income as a result of disablement following an accident or illness.

If the policies also provide for benefits other than disability benefits, the premiums relating to the disability benefits should be disclosed separately from premiums relating to the other benefits.

Such separate disclosure should be made on the certificate issued by the insurance company.

Please note that, although the premiums would be tax deductible, the compensation to be received from the policies because of the loss of income will be taxable in the year the compensation is received or you become entitled to it.

Contributions to PPS could also include contributions to a medical aid fund and a retirement annuity.

These contributions would be deductible for tax purposes within the limitations imposed by section 18 and 11(n) of the Income Tax Act.

Textbooks acquired by professionals are considered to be of a capital nature. However, a wear and tear allowance of 33.3% a year over three years can be claimed based on the cost price of these books.

If the textbooks were acquired in a previous tax year, you would strictly speaking only be able to claim wear and tear of 33.3% for the remaining two tax years.

If you have already been assessed on the previous year's income, you can apply to your local Receiver of Revenue to reopen your assessment for that particular year, subject to his discretion, and claim the wear and tear accordingly.

The above expenses would be claimed as deductions in your annual tax return under the heading "Deductions" part 3.10 "Other".

Details must be furnished and should be supported by proper documentation.

Provisional confusion

TAKING advantage of the SA Revenue Service's tax amnesty, my wife submitted a tax return where income (interest) was R2 575 and annuity was R1 938.

The Receiver of Revenue assessed her tax payable as nil.

Recently she was advised that she no longer needs to submit an income tax return, but the same correspondence also states if interest of R2 000 and more is received a return must be submitted.

Which is correct?

Kenny Silke of Cape Town- based Silke Investment Corporation and Unit Trust Centre replies: As you did not provide any information on how old you and your wife are, or whether you are married in or out of community of property, I can only respond by setting out the tax position relating to your query in general.

Couples married in community of property may split income in half in order to lessen the tax bill.

It is also important to bear in mind the tax thresholds.

Taxpayers under the age of 65 have a tax threshold of R18 500 and over 65 one of R31 950.

Depending on which age group you and your wife fall into, this means no tax is payable on the first R18 500 or R31 950 of annual income respectively.

As long as an individual's taxable income does not exceed thethresholds, no return will have to be submitted.

However, a provision states that anyone earning more than R2 000 a year must register as a provisional taxpayer.

The onus is then on the taxpayer to point out to the Receiver of Revenue that he or she falls below the threshold mentioned earlier and therefore does not need to complete a return.

Another provision says any individual older than 65 is exempt from the payment of provisional tax if taxable income does not exceed R50 000 a year and consists solely of remuneration, interest and/or rental income.

Since the SARS informed your wife that she no longer has to submit a return, she has nothing to worry about if she fulfils these criteria.