Every year, at the start of tax season, we receive a lot of queries from policyholders looking for income tax certificates for their 1Life policies. It is important to note that we do not in fact issue tax certificates to clients. This article explains why and takes a closer look at some of the expenses that you can claim for.
Why Life Insurance and Funeral Cover Pay-outs Are Tax-Free
Life insurance secures your family’s financial future in the unfortunate death of a breadwinner and leaves you with the peace of mind that all will be taken care of. There are many expenses that are tax deductible monthly, but life insurance as well as funeral cover don’t fit into this category. Wondering why? The answer is that both your life insurance and funeral cover lump sum pay-outs are tax free, which means that when the time comes for you or your beneficiaries to claim the amount that you are covered for, no tax will be deducted, therefore your monthly policy contributions are not tax deductible and therefore no tax certificate will be issued.
In the past, 1Life Expense Protector policyholders were able to get tax deductions for premiums paid. However, in terms of the Taxation Laws Amendment Act 43 of 2014, from 1 March 2015, contributions to income protection policies will no longer be tax deductible.
What expenses are tax deductible?
If you’re looking to understand what salary deductions you can claim for, here is a list from SARS:
- Pension fund contributions
- Retirement annuity fund contributions
- Provident fund contributions
- Legal costs – under certain qualifying circumstances
- Wear–and-tear – in respect of certain assets
- Donations – to approved bodies
- Repayable amounts – amount received for services rendered as refunded by that person
- Bad and doubtful debts – employment related
Another portion of your expenses that you might get tax returns for are your medical expenses. TaxTim have designed an easy way for you to work it out with a medical aid tax credits calculator.
Remember to contact our client services team if you have any questions about your 1Life policy and income tax certificates. To read more on individual tax deductions and what applies to whom, visit SARS.
Original article published on: 7th March 2017
Updated on: 11th September 2018