Tax Season 2016 opened yesterday, which means you can officially complete and submit your income tax return. Here are 10 things you should know about doing your duty to the taxman.
1. Make sure you enter information for the correct tax year on your return (ITR12). The 2016 tax year started on March 1, 2015 and ended on February 29, 2016. Make sure you don’t inadvertently try to claim deductions that took effect on March 1 this year, or use tax rates that were introduced in this year’s Budget when checking your tax assessment or calculations. For example, you will be entitled to claim retirement fund contributions up to 27.5 percent of your taxable income only when you submit your 2017 return. If you are claiming for medical expenses that you could not recover from your medical scheme, check that the expenses were incurred during the 2016 tax year.
2. The sooner you submit your return, the sooner you can expect to receive any refund that is due to you. The South African Revenue Service (SARS) says that, of the R15 billion that it refunded to 1.82 million taxpayers in last year’s tax season, 95 percent was paid out within 72 hours of the returns being submitted. SARS says that, last year, 95 percent of returns were assessed within three seconds and more than 99 percent within 24 hours.
3. The date by which you must file your return depends on how you submit it and whether or not you are a provisional taxpayer.
* If you submit your return by post or drop it off at a SARS branch, irrespective of whether you are or are not a provisional taxpayer, the deadline is Friday, September 23;
* If you file your return electronically at a SARS branch, irrespective of whether or not you are a provisional taxpayer, the deadline is Friday, November 25;
* If you are not a provisional taxpayer and you file your return via eFiling, the due date is Friday, November 25; and
* If you are a provisional taxpayer and you file your return via eFiling, you must file by Tuesday, January 31.
4. You might not have to submit a tax return even if you earned an income. You do not have to submit a return if your total (before-tax) salary for the tax year was less than R350 000 and
* You received a salary from only one employer;
* You had no other source of income, such as a car (travel) allowance, business or rental income, or taxable interest on any investments; and
* You don’t have any deductions you can claim, such as medical scheme contributions, retirement fund contributions and travel expenses.
Taxable interest is any interest you earn over the exemption of R23 800 if you are under 65 years of age, or over R34 500 if you are older than 65.
5. You might have to submit a return even if you received no income and have no deductions to claim. The South African Institute of Chartered Accountants says there are three instances where non-income-earners have to submit a return:
* You are a South African resident who owned foreign assets (including foreign currency) worth more than R225 000 at any point during the tax year – for example, you had $20 000 in a United States bank account earning zero interest, or you own a house in Namibia with a value of more than R225 000 where some family members live rent-free.
* You are a South African resident who owned shares in a foreign company in which more than 50 percent of the shares were owned by South Africans. For example, you and a Zambian friend started a company in Zambia. You own 60 percent of the shares and your friend owns 40 percent. You quit your job, and your wife supported you for a year so you could give the business your full attention. Although you did not earn an income during the tax year, you must submit a return, because your shareholding, as a South African, exceeds 50 percent.
* You are a representative taxpayer: someone who is legally entrusted with ensuring that a legal entity fulfils its tax obligations – for example, the public officer of a company or a trustee of a trust. If a company or trust does not submit a return or pay tax, you will be held responsible by SARS. For example, you left your job and started a company. You lived off your savings while getting the company started and received no income from the company. As the sole shareholder, employee and director, you are responsible for the company’s taxes. You may hire an accountant, but the buck stops with you, and if your company does not fulfil its tax obligations, SARS targets you, not your accountant.
6. Tax Season provides fraudsters with fresh opportunities to steal your money. Essentially, they send emails bearing the SARS branding that purport to be verifying your details or notifying you of a refund. Andre Dames, a partner at tax and auditing firm Middel & Partners, says that, of late, scamsters have turned their attention to small business owners, by pretending to be agents collecting unpaid taxes or offering to “wipe away” unpaid taxes, for a fee.
He says SARS has appointed three agencies to manage the collection of debt: CCS Credit Solutions, NDS Credit Management and Lekgotla Trifecta Capital Consortium. You should report any other debt collectors or self-proclaimed SARS officials to SARS.
Dames says business owners should remember that all outstanding tax, VAT and duties must be deposited directly into SARS bank accounts. From April 1, SARS does not accept manual payments at SARS branches; payments can be made only at approved banks, via eFiling and via electronic funds transfer.
The SARS website (www.sars.gov.za) has extensive information on how you can protect yourself from online fraud, as well as examples of some of the latest scams doing the rounds. On the home page, click on “Fighting tax crime”, then go to “Identity fraud” or “Scams and phishing”.
7. There will be some changes to the return this year. At an SA Institute of Tax Professionals webinar earlier this week, SARS said the following changes have been made:
* You will not be able to edit or delete the pre-populated IRP5 information on your return. If your employer has provided SARS with incorrect information, you will have to contact your employer to have it corrected.
* A distinction will be made between income and expenses linked to a local business and rental income and expenses associated with letting out a property. You will have to enter the rental income and expenses for each property you rent out.
* The return will make provision for you to enter contributions you have made to tax-free savings accounts.
* If you want to claim a deduction for donations to a public benefit organisation, you will have to enter the organisation’s reference number.
8. If you file your return electronically at a SARS branch, remember to take all supporting documentation with you:
* Proof of identity – your identity book, passport or driver's licence.
* Proof of income – IRP5 (from an employer), IT3(a) (pension or retirement fund), IT3(b) (investments) and bank statements.
* Proof of allowable deductions – statements from your retirement annuity fund, medical scheme, an approved public benefit organisation (donations tax exemption), accounts from medical practitioners (health-care expenses not paid by your medical scheme), a log-book to claim a travel allowance), proof of expenses incurred to generate rental income (for example, proof of interest on mortgage bond payments, levy statements, rates accounts).
9. If a tax practitioner completes and submits your ITR12 on your behalf, you are still responsible for the veracity of the information. You are also responsible for any outstanding returns, payments and penalties. It is also your responsibility to check that your practitioner is registered with a “recognised controlling body”, as well as with SARS. Ask your tax practitioner for his or her tax practitioner registration number, which you can verify on eFiling. On the eFiling home page, click “QuickLinks” and from the drop-down menu choose “Confirm practitioner registration status”.
10. Don’t panic if you have forgotten your eFiling log-in and password. Go to www.sarsefiling.co.za, click on the question mark and request your log-in details. SARS will send them to your registered email address or cellphone number.