When you receive your salary every month, you probably look at three numbers: your gross salary, the deductions, and the amount that finally reaches your bank account.
But have you ever wondered whether the amount of income tax being deducted from your salary is actually taking into account all the tax reliefs and deductions you are entitled to?
This is where the Employee Declaration Form, or EDF, becomes important.
Purpose of an EDF
The EDF is a declaration made by an employee to inform the Mauritius Revenue Authority(MRA) and your employer what are the reliefs, deductions and allowances that you are entitled to claim for the income year. These amounts are then taken into account when calculating the monthly PAYE ( Pay As You Earn)Â which is the income tax deducted from salary at the end of each month.
Why is the EDF important?
In simple terms, getting your EDF right will make sure that the tax deducted from your salary each month more accurately reflects the tax you are actually expected to pay for the year.
It can have a direct impact on how much money you take home each month.
Imagine two employees earning exactly the same gross salary e.g Rs. 50,000.
Employee A has no dependents and no additional deductions.
Employee B has a dependent child pursuing tertiary education, pays for a medical insurance premiums and has a housing loan.
Despite having the same gross salary , the amount credited to employee B bank account at the end of the month will be higher than employee A.
What exemptions Can You Claim Through the EDF?
The deductions and reliefs available can change from one income year to another, so employees should always refer to the latest MRA EDF and guidance. Historically the main deductions are as follows :
Â
| Deduction/Relief | What it means |
|---|---|
| Dependent allowance | Deduction for having dependents such as a spouse or children |
| Child pursuing tertiary education | Deduction when a dependent child is studying full-time at a recognised tertiary institution. |
| Housing loan interest | Deductions for any Interest paid on a housing loan |
| Medical / health insurance | Deduction for any medical or health insurance paid for yourself and your dependents. |
| Solar energy investment | Deduction for investment in a solar energy unit. |
| Rainwater harvesting system | Deduction for investment in a qainwater harvesting system. |
| Electric vehicle fast charger | Deduction for investment in a fast charger for an electric vehicle. |
| Personal pension contribution | Deduction for contributions made to an approved personal pension scheme. |
| Approved charitable donations | Deduction for donations made to approved charitable institutions. |
| Private school fees | Deduction for fees paid for a dependent child attending an eligible private primary or secondary school. |
| Carer expenses | Deduction for wages paid to a carer for a person under your care. |
Filing an EDFÂ
An EDF is generally completed at the start of each income year, typically from around August.
You may also need to complete a new EDF when:
- you change employer;
- your personal or family circumstances change;
- you become entitled to a new deduction or relief during the year; or
- information in your previous declaration is no longer correct.
When completing an EDF, you may come across something called an ERN.Â
ERN stands for Employer Registration Number. It is the registration number assigned to your employer for tax purposes. The EDF requires the employer’s ERN so that your declaration can be associated with the correct employer.
If you don’t know your employer’s ERN, you should normally ask your HR, payroll or finance department.Don’t guess the number. Get the correct ERN from your employer before submitting your declaration.
The Smart Shopper Takeaway
You would want to maximise the take home pay you receive every month.Â
The EDF is one of the tools that helps ensure your monthly PAYE calculation reflects the tax reliefs, deductions and allowances you are legally entitled to claim.
The objective isn’t to pay less tax than you legally owe.
The objective is to pay the correct amount of tax.
Understanding the rules can help make sure you are not paying more than you are legally required to pay during the year.Â