are allowed as a deduction of up to R15,000 per year on furnishing of medical bills.
Minor child’s income: When we make investments in our child's name, the income earned from these investments will be clubbed with our income. However, if we invest anywhere in a minor child's name and this investment generates an income, we can claim up to R1,500 as a deduction on this income. This is available for up to two children. For example, we can invest up to R15,000 in a long-term fixed deposits which gives an annual return of 10%, and be exempt from tax.
Formation of a trust: We can set up a trust in a minor child's name to save on tax. We will need to make an irrevocable transfer to the trust, so that the money will not be claimed by us. When we make investments through this trust, the income made through these investments will not be clubbed with our income. Even though the trust has to pay tax on this income, the total tax liability will be lower if the income is clubbed with our income.
* The writer is managing partner, Nangia & Co. With inputs from Neha Malhotra