How To Reclaim Tax

WHY DO so many non-taxpayers have deposit and investment accounts where interest is taxable and is usually deducted automatically? If you are a non-taxpayer, you may not be liable for this tax. But taxpayers can take action to avoid paying it.

Put money aside in a bank or building society deposit account, and the interest it earns will be taxed at 20 per cent. You can avoid this and receive the interest gross by filling in the tax exemption form R85 for each account you hold.

If you have paid tax on your savings in the last six years when you were not liable to it, you can claim this back by filling out form R40, from your local tax office.

Bonds issued by insurance companies and investment houses are taxed differently. Investors may find the interest is automatically taxed at 20 per cent and is not reclaimable even if you are a non-taxpayer. This is the case with guaranteed-income and guaranteed-growth bonds.

Any dividends you earn from shareholdings or unit trusts have tax deducted at source. You then receive a dividend cheque and a tax credit voucher. Non-taxpayers should send this credit voucher to their local tax office for a refund of the tax that has been paid.

The Inland Revenue has produced A Guide For People With Savings, leaflet IR110, available from your tax office.