As the festive season approaches, it’s common for spending to rise travel, family gatherings, gifts, and year-end events all add up.

With a few mindful habits and some strategic tax planning, you can enjoy the holidays while keeping your financial health on track.

Here’s your practical guide to spending wisely and preparing for a more tax-efficient year-end.

Set a Festive Budget That Actually Works

South Africans often underestimate holiday costs, especially with seasonal price increases.

Tips to stay in control:

• Create a budget for gifts, food, travel, and entertainment.
• Use loyalty programmes (eBucks, Vitality, Smart Shopper, UCount) to reduce costs.
• Shop earlier to avoid “last-minute inflation” from surge pricing and limited stock.

Consider Cost-Effective, Meaningful Gifting

Thoughtful doesn’t mean expensive.

Ideas:

• Give personalised or handmade items.
• Suggest family gift draws instead of buying for everyone.
• Compare prices using local apps and online stores to avoid overspending.

Make Use of Tax-Efficient Investment Products Before 28 February

South Africa’s tax year ends on 28 February meaning the festive season is a perfect time to review contributions.

Consider topping up:

• Retirement Annuities (RAs): Contributions may be tax-deductible topping up before tax year-end can lower your taxable income.
• Tax-Free Savings Accounts (TFSAs): While contributions aren’t deductible, growth and withdrawals are tax-free.
• Endowments: Useful if you’re in a higher tax bracket and want tax-efficient long-term investing.

If you’d like, I can include this year’s exact contribution limits.

Be Strategic With Charitable Giving

Giving is a big part of the holiday spirit and SARS may offer tax benefits.

Consider:

• Donations to S18A-approved organisations may qualify for tax deductions.
• Always request an S18A certificate for your records.
• Year-end is a good time to “bunch” charitable donations to maximise the deduction.

Review Your Medical Scheme & Medical Expenses

Medical expenses often spike during December due to year-end travel and festive activities.

Tax considerations:

• Keep receipts for qualifying out-of-pocket medical expenses.
• Make sure you understand your medical scheme’s year-end benefits, gap cover rules, and thresholds.
• If you’re approaching the end of the tax year, additional qualifying expenses may help you claim a portion back.

Check Your Tax Withholding Before February

If you received a large refund last year or an unexpected bill adjusting your PAYE or provisional tax now can help you avoid surprises.

A quick review can ensure your tax profile is accurate before SARS’s February deadline.

Plan for Holiday Travel Wisely

Travel is one of the biggest December costs.

Ways to save:

• Book in advance or travel slightly off-peak when possible.
• Compare domestic routes and carriers prices can vary widely.
• Look for fuel rewards if driving long distances.

Get a Head Start on Your 2025 Financial Plan

The new year is a perfect opportunity to refresh your financial strategy.

Consider reviewing:

• Your emergency fund
• Your investment and savings goals
• Your tax position ahead of February year-end
• Short-term debt and credit use over the holidays

Small adjustments now can create a more secure financial year ahead.

We’re Here to Help

If you’d like personalised year-end tax planning or help reviewing your investment strategy before the 28 February deadline, we’re here to guide you.

Wishing you a joyful, financially confident holiday season!
– Your Advisory Team @Worldwide Tax Solutions

• Legal Basis: This action is taken under the Tax Administration Act 28 of 2011.
• Direct Collection: The notice instructs a third party (e.g., an employer, bank, or pension fund) who holds money on behalf of the taxpayer to pay that money directly to SARS in satisfaction of the tax debt.
• Employer’s Obligation: An employer receiving a valid Third Party Notice is legally obligated to comply and deduct the specified amount from the employee’s salary.
• Without Prior Court Order (sometimes): While a general garnishee order (or emoluments attachment order) from a normal creditor typically requires a court order signed by a magistrate, SARS has specific powers under the Tax Administration Act to issue a Third Party Notice directly to an agent (like a bank or employer) to collect outstanding tax debt.
• Notification: The taxpayer should be notified of the outstanding debt and the intended action, giving them a chance to make a payment plan. The third party (employer/bank) also receives the notice. 

• Verify the Debt: Ensure the amount claimed is correct and you genuinely owe the tax debt.
• Contact SARS Immediately: The best way to manage this is to communicate with SARS and, if possible, establish a formal, affordable payment plan.
• Request Affordability Review: If the deduction amount leaves you without enough money to cover basic living expenses, you or your employer can notify SARS and request an affordability assessment. SARS can then cancel the original notice and issue a new one with revised, affordable terms.
• Challenge the Validity: You can challenge the notice if there are procedural errors, the debt is incorrect, or you were not properly notified. This may involve visiting a SARS branch or seeking legal advice.
• Legal Assistance: Consulting with a tax practitioner or legal professional can help you navigate the process, verify the order’s validity, and, if necessary, apply to the court to have it varied or set aside. 

📌 SARS Crackdown on Offshore Assets
SARS continues to exchange financial data with over 100 countries. If you hold offshore investments, ensure they are fully disclosed to avoid hefty fines.

💰 Tax-Smart Tips

1. Use Your Medical Tax Credits
   Keep receipts for medical aid, out-of-pocket expenses, and chronic medication – these can reduce your tax bill.
2. Maximise Retirement Contributions
   Contributions to pension, provident, or retirement annuity funds are deductible up to 27.5% of taxable income (capped at R350,000 per year).
3. Home Office Deductions
   If you work from home, part of your rent, internet, electricity, and cleaning costs may be deductible – provided you meet SARS’s strict criteria.
4. Provisional Tax Planning
   If you earn income outside of a salary (like rental, freelance, or business income), make sure your provisional tax estimates are realistic to avoid underpayment penalties.

🌍 For South Africans Abroad

• If you spend more than 183 days outside SA (60 consecutive) and meet the physical presence test, you may qualify for the foreign employment income exemption under Section 10(i)(o)(ii).
• However, SA residents are taxed on worldwide income unless formally ceased residency. Get professional advice before assuming you’re exempt from Worldwide Tax Solutions

📊 Did You Know?

• Small business owners can qualify for Turnover Tax, a simplified tax system if your annual turnover is under R1 million.
• Donations up to R100,000 per year per individual are exempt from Donations Tax.

📌 Action Step for This Month

Check your IRP5 and third-party data on SARS eFiling – SARS already has much of your information. Ensure it matches your own records to prevent disputes.

Investors have to pay tax when they earn money on their investments, like shares or unit trusts.

The main types of investment income which have income tax consequences are:

• local and foreign interest
• foreign dividends
• interest from Real Estate Investment Trusts (REITs)
• capital gains

The sale of investments (like shares) also triggers a capital gains tax event.

Dividends earned from local companies attract DWT (dividends withholding tax), but this is automatically withheld by the company who pays out the dividend, so there are no further tax obligations once you receive your net dividend (i.e after DWT).

The actual tax you pay depends on your own marginal income tax rate and the type and amount of investment income and capital gains you earn from your investments. The higher your marginal income tax rate, the more tax you will pay.

If you own investments, your financial institution should issue you a tax certificate (IT3b) which you must use to complete the investment section of your tax return. This will ensure that your taxable income is calculated accurately with the correct interest, foreign dividends and foreign tax credits included.

Local interest income

If you own bonds or have cash in the bank, then the interest you earn on this will be taxed. If you hold unit trusts then these often attract interest, which is taxable too. This interest income is subject to income tax and is taxed at your marginal tax rate.

Individual taxpayers enjoy an annual exemption on all South African interest income they earn, set by SARS every year. This interest exemption has remained unchanged for a number of years and for the 2026 tax year is set at R23 800 for individuals under 65 years old, and R34 500 for individuals 65 years and older. South African Retail Savings Bonds and any interest from the money in your Medical Savings Account (of your medical aid) can also be taxed.

You need to declare local interest (source code 4201) in the Investment Income section of your tax return.

Foreign interest income

If you earn foreign interest, you need to report the Rand equivalent amount to SARS. Unlike local interest, there is no exempt portion, however you will be able to deduct any foreign tax you pay.

You need to declare foreign interest (source code 4218) in the Investment Income section of your tax return, together with the foreign tax credit which was paid in another country (source code 4113).

Local dividend income

For equities (excluding listed property companies), dividends withholding tax (DWT) of 20% is withheld before it’s paid out or reinvested. Note that DWT is payable only on dividends paid out by the companies and is payable after the company has already paid 28% corporate tax on its net profits.

Foreign dividend income

South African residents that earn foreign dividends generally have to pay tax on those foreign dividends and declare them when submitting their South African tax return.

The tax paid on the foreign dividends depends on the amount and type of shares held in the foreign company.

In most cases, where the taxpayer holds less than 10% of the equity shares and voting rights in the foreign company, then the foreign dividend received will be taxed. The full amount of the dividend must be shown in the tax return, however SARS will allow a tax exemption which equates to 25/45 of the Rand value of the foreign dividend. If the taxpayer has paid foreign tax on the dividend, this must also be declared, and SARS will reduce the local tax by the foreign tax paid.

Where the taxpayer holds at least 10% of the equity shares and voting rights in the foreign company, then 100% of the foreign dividend will be exempt in the taxpayer’s hands.

Income from Real Estate Investment Trust (REIT)

The tax regime associated with listed property companies in the form of Real Estate Investment Trusts (REITs) is more complicated than other asset classes. REITs are taxed differently to other listed companies: they do not pay corporate income tax, and their investors do not incur DWT on the distributions they receive. Instead, investors pay income tax on the distributions they receive from these REITS at their marginal income tax rate.

You need to declare distributions from REITS (source code 4238) in the investment income section of your tax return.

The investment tax certificate (IT3b)

An IT3b is a tax certificate received from an institution like a bank or financial services company. It will be a summary of any interest dividends (both local and foreign) and REIT that you would have earned by having money invested with one or more of these places.

What about Capital Gains Tax?

A capital gains event is triggered only when you decide to sell (part or all of) your investments, like units in a unit trust. If the price of the units has risen since you invested, this increase in value is known as a capital gain, or a capital loss if the value has declined. Currently, an amount of 40% of this capital gain (not the total proceeds) is included in your annual taxable income – this makes the maximum effective capital gains tax rate for individuals 18%. How do we work this out? By taking the maximum 45% marginal tax rate for individuals and multiplying it by 40%, that’s how.

Note that individual taxpayers currently enjoy an annual capital gain exclusion of R 40 000.

Tax free savings account

South Africans are not very good at saving, for a number of reasons. With most people living near or below the breadline, it’s impossible to save when you’re more concerned with merely surviving. Combine this with our high levels of consumer debt, and little in the way of personal savings, and this means that many people become financial burdens on the government in the long run. This is why the government introduced tax free savings accounts in March 2015, as a way to encourage household savings among South Africans.

Since then, financial institutions have tried to get people on board with these savings accounts, promoting them heavily on the radio, TV and online, explaining to people that they are an accessible way to save. And because they offer a tax break to consumers, this year you’ll see them referenced on your annual tax return (ITR12).

What is a tax free savings account?

This savings account offered by financial institutions invests your money in a combination of financial products like unit trusts, bank savings accounts, fixed deposits and bonds.

So how is it different? The difference between it and other savings or investment accounts is that all returns (the interest, dividends or capital gains earned), will be tax-free in your hands. This means that you’re not liable to pay tax on the growth of your investment, or if you decide to withdraw from your account.

Are there limits to tax free savings accounts?

Annual and lifetime contribution amounts
There’s an annual contribution limit of R 36 000 for the 2026 tax year, as well as a lifetime limit of R 500 000. Once you’ve reached your lifetime contribution limit of R 500 000, you can’t make any more investments into your tax-free savings account, otherwise you will be penalised by SARS.

The annual contribution limitations for previous tax years:

• R 30 000 for the 2016 and 2017 tax years
• R 33 000 for the 2018, 2019 and 2020 tax years
• R 36 000 for the 2021, 2022, 2023, 2024, 205 and 2026 tax years

No limit on number of accounts
Your annual limitation can be spread across as many savings accounts as you want, as long as you don’t invest more than R 36 000 in total in for the 2026 tax year (1 March to end February). If, for example, you’ve already contributed R 20 000 to one tax free savings account in that time period, you’ll only be able to invest up to R 16 000 in any others.

No carry over of annual contribution limit
Your annual limitation can’t be carried over to the next tax year – instead you simply forfeit any amount you didn’t use and are given a new annual limit to invest in a tax-free savings account. For example, if you’ve invested R 26 000 in the 2026 tax year, you can’t carry the R 10 000 over to the next tax year.

Contributing to a tax-free savings account for a minor
As a parent, it’s a good idea to open a tax-free savings account for your children, but you need to be aware that any contributions you make on their behalf count towards their annual and lifetime contribution limit.

Why should I take out a tax-free savings account?

Get tax free growth, even if you reinvest
The biggest advantage of a tax-free savings account is that your earnings on the initial investment are not taxed when you withdraw the funds. You can reinvest (or capitalise) your returns, and they don’t go towards your annual or lifetime contribution limit.

For example, if you invest R 36 000 for the 2026 tax year and receive a return on this investment of R 6 000 that you then re-invest, the total amount in the account will be R 42 000. But you’ll still be able to invest your full R36 000 the next year as the R 6 000 reinvestment doesn’t count towards your annual or lifetime limit.

Unlimited withdrawals (with conditions)
You can withdraw from your tax savings account any time, however any replacement investment amount is treated like a new contribution and will therefore count towards your annual and lifetime limits.

Say you withdraw R 36 000 from your tax free savings account, because you’re experiencing a temporary cashflow problem. A few months later (in the same tax year), you have a bit of spare cash again, so you deposit R 36 000 back into your tax free savings account. Provided that you haven’t made any other contributions for the year, this amount takes you right up to your contribution limit for the year, plus it’ll be added your overall lifetime contribution. If you’d already made a contribution in the tax year, this payment would have pushed you over your annual contribution level and SARS will penalise you (see below).

What happens if I exceed my contribution limit?

If you go over your annual or lifetime limit, SARS makes you pay a strict 40% penalty on the excess you contributed. You’ll need to pay this after assessment in the year that you exceeded the limit.

Say that in one tax year, you invest R 10 000 in a tax free savings account with one institution and R 30 000 in an account with another one, you will have contributed R 4 000 more than your annual limit of R 36 000. The penalty will therefore be 40% of this excess contribution (R 4 000 x 40%), which equals a R 1 600 tax penalty you’ll need to pay.

How do I report my tax free savings account on my tax return (ITR12)?

The financial institution holding your tax free savings account will issue you with a tax certificate called an IT3(s), which has all the details you need for your tax return like contributions, interest and dividends. Capture this information from your certificate in a new section in your tax return called Tax Free Investments