Tax and SARS knowledge base
How do I report interest expenses per institution on my 2026 ITR12?
How do I declare allowable interest expenses per institution on my 2026 ITR12?
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Direct answer
For the 2026 filing season, SARS requires allowable interest expenses to be declared at transaction level, meaning separately for each institution. Do not combine unrelated bank, investment or loan amounts into one unsupported total.
Only an expense incurred in producing taxable interest may qualify. SARS states that the section 11G expense deduction is limited to the interest income received or accrued for the year of assessment. Personal borrowing costs and expenses linked to exempt or unrelated income are not made deductible merely because the ITR12 contains a field.
What this means in practice
Start with the interest income records for each institution and trace any claimed expense to the borrowing or arrangement that produced that income. The account number, period, purpose and calculation should agree with the supporting statements.
Where one facility funded several activities, a reasonable allocation may be necessary. Keep the method consistent with actual use. A broad percentage chosen after year-end, without bank-flow evidence, is vulnerable during verification.
The transaction-level structure also means a taxpayer should not net interest expense against interest income before disclosure. Capture the required income and allowable expense information in the correct fields so SARS can perform the return calculation.
Step-by-step
- List every institution from which interest was received or accrued.
- Match each amount to its certificate, statement and account number.
- Identify any expense claimed to have produced that specific interest.
- Exclude private interest, capital repayments and costs linked to another income source.
- Allocate mixed-purpose expenditure using a documented, supportable method.
- Check that the section 11G claim does not exceed the related interest received or accrued for the year.
- Capture the details separately for each institution in the investment-income section of ITR12.
- Compare the completed return with third-party data prepopulated by SARS.
- Save the calculation and source documents before submitting.
Documents and records to keep
- IT3(b) certificates and annual interest statements.
- Bank and investment account statements.
- Loan agreements and evidence of how borrowed funds were used.
- Institution-by-institution reconciliation.
- Mixed-use allocation calculation, if applicable.
- Copies of the completed ITR12 fields and final submitted return.
Important limits and exceptions
The presence of a field is not proof that an amount is deductible. The general connection between expenditure and taxable income still matters, and section 11G imposes a cap based on the interest received or accrued.
Interest on a home loan, personal overdraft, credit card or investment purchase is not automatically claimable. The facts, purpose and flow of funds determine whether the expense was incurred in producing taxable interest.
Interest exempt under section 10(1)(h), amounts affected by a double taxation agreement and foreign interest can require separate treatment. Do not force them into a local taxable-interest calculation simply to match an institution total.
When to get tailored advice
Get advice for mixed-purpose borrowing, foreign accounts, trusts, partnerships, large deductions, missing certificates or a SARS verification request.