They say that only two things in life are certain: death and taxes. But paying taxes is actually fraught with a great deal of uncertainty. Most people struggle to understand the complexities of the process – how much they owe, when to submit a return and who to speak to if something goes wrong – and view taxpaying as a frightening journey.
While it’s never fun giving money to the South African Revenue Services (SARS), it can be less painful if you understand the process a little better. Here are ten things that you need to know to file your tax return with confidence.
*Note: this article deals with tax returns for non-provisional taxpayers. Non-provisional taxpayers are those who earn an income from one or more employer. Provisional taxpayers form a much smaller segment of the tax base and are those individuals with other forms of income like investment income, income from business activities, rental income, royalties income or directors of companies.
If you are younger than 65 years old, you only need to pay tax if your income is more than R73 650 per year. Remember that your income is the money you earn either at your job or from other activities like renting out a room in your home or working after hours, as well as any interest you’ve earned on investments.
This starting taxation amount changes each year, so be sure to check what the threshold is on the SARS website.
If you are older than 65, the tax threshold increases to R114 800, and if you are older than 75, the threshold is R128 000.
If you have never paid taxes before, you will need to go to your nearest SARS branch with your ID book and proof of residence, and fill out an Income Tax for Individuals (IT77) form. You will be registered while you wait, and will then receive an email notification of your registration and tax number. This tax number is yours for life and will be quoted in any future dealings you have with SARS. Remember that tax season runs from July to November, so it’s best to avoid SARS branches at this time if you possibly can.
If you are not sure whether you have been registered, you can call the SARS Contact Centre on 0800 00 7277.
Your employer should deduct Pay As You Earn (PAYE) from your salary each month and pay that to SARS on your behalf. If you have any other sources of income – like rental or interest earned on investments – you will have to declare those to SARS when you do your tax return. After your return has been assessed, you may have to pay additional tax to SARS, who will then inform you of their banking details, or you may receive a tax refund. This is discussed in greater detail in the next point.
Every month, you pay tax on the amount of money that you earned in that month. If the amount that you earn fluctuates – for instance because of bonuses, travel or commission – you might pay tax at a higher rate in that month. At the end of the year, you need to make sure that you are paying tax at the correct rate for your annual total – which means you might have to pay money back to or receive a refund from SARS.
In addition, there are some expenses that are “tax deductible”, which means that the amount that you spend on them is deducted from your total taxable income. These include medical aid contributions and retirement annuities, but a full list of the tax deductible expenses appears below.
If you earn less than R350 000, you do not have to do a tax return, but remember that you can’t get a tax refund if you don’t.
There are a number of different ways that you can file your tax return:
- You can post your tax return to SARS.
- You can take the documentation listed below to your nearest SARS branch for assistance.
- You can register to pay your taxes online through the SARS efiling system.
- Some employers provide staff support for completing tax returns.
- You can hire an accountant to do your tax return for you.
- You can do your tax return online through TaxTim, which offers online support through the different steps of filing your return.
These are the documents you need to submit:
- Your IRP5/IT3 certificate, which you will receive from your employer
- Medical aid certificates as well as details of any other medical expenses that weren’t covered by your medical aid
- Pension and retirement annuity certificates
- Your banking details
- Travel logbook (if you receive a travel allowance)
- Tax certificates that you received in respect of investment income (IT3(b))
- Completed confirmation of diagnosis of disability (ITR-DD), where applicable
- Any other documentation relating to income you received or deductions you want to claim.
Remember that different methods of filing your tax return have different deadlines, so be sure to check with the SARS website to make sure you know when your return is due each tax season. Pay on time to avoid penalties.
This is a list of costs that are deductible, according to SARS:
- Medical scheme contributions
- Medical expenses not covered by your medical aid.
- Pension fund contributions
- Retirement annuity fund contributions
- Income protection
- Legal costs – under certain qualifying circumstances
- Wear–and-tear – in respect of certain assets
- Donations – to approved bodies
SARS can pay refunds as quickly as one day later, but there have been increased delays in paying returns in the last couple of years. If you have submitted a return but haven’t heard anything at all from SARS within a few weeks, contact their call centre to find out why.
When you fill out your tax return, you provide all the information relating to your income and expenditure over the tax year to SARS. If they are in some way dissatisfied, they can request an audit, which means that you are required to provide them with all original documents that prove the numbers you have quoted.
Although an audit is a painful experience to go through because of the admin involved, if you have been honest in your return and kept track of the correct documentation, you should have nothing to worry about.
And remember to keep your supporting documentation for FIVE YEARS, because SARS can request it at any time.
If you have any concerns about your tax assessment, you can contact the Tax Ombudsman for their intervention in the matter.
Unfortunately, scammers are becoming increasingly sophisticated, and it is now common for taxpayers to receive emails that say they are from SARS, announcing a tax refund, and requesting your banking details to process the payment. You can visit the SARS website for updated information on any new scams, but always remember that SARS will never request your bank details over email or SMS.
Paying your taxes isn’t fun, but you can take comfort in the fact that you are doing the right thing and contributing to building our nation. Be honest and do your tax return on time.