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Tax Season is upon us and this year the South African Revenue Service (SARS) will come-down hard on individuals that are non-complaint in filing their tax returns. Recent media headlines announced that SARS reported a revenue shortfall for 2018/19, making it the fifth shortfall year estimated at R57.4bn less than the original mark. Tax season will soon begin and without a doubt, the revenue services will attempt to reach its collection target.
Taxpayers of South Africa have until 31 October to file their individual personal income tax returns. For outstanding returns, penalties range up to R16 000 per month for higher-earning taxpayers and individuals have been convicted and sentenced in the past for failure to submit.
Year after year, more than two million taxpayers leave filing their tax returns to the last minute. The collection target, penalties combined with the shortened annual tax filing season by three weeks, can be extremely overwhelming. Taken from my book, Tips, Tricks and Checklists from a Tax Practitioner. Here are five simple steps to help ace your SARS income Tax Return this season:
Get your act together: Taxpayers have to collect a number of different documents to substantiate and inform their tax calculations and submissions. These documents are not the same for every taxpayer and should be collected from various sources, such as medical aids, banks and suppliers before the income tax submission can be started.Advertisement
One SARS step at a time: Complete Section 1 and 2 of the tax returns. It is important to understand the reason for the questions and how these apply to you before populating the answers. For example, a question regarding how the taxpayer is married and the options include ‘in community of property’ and ‘outside community of property’. Because tax on passive income is calculated differently for taxpayers depending on whether they are married in or outside community of property, selecting either one of the options will result in a very different result for the taxpayer and taxpayers should ensure that the correct option is selected.
Show me the money: Section 3 of the tax return involves inputting the figures that inform the calculations of the tax submission. ensure that the calculations of the tax return are accurate, valid and complete.
Navigate and know where you are going: Navigating the e-filing profile becomes the next challenge for the taxpayer. Save, submit and view the outcome of the tax return. There are four pieces of information the taxpayer must be able to obtain and save for future records. These are the Statement of Account (ITSA), Admin Penalty Statement of Account (APSA), Income Tax Assessment (IT34) and Income Tax Return (IT14) and there is a different menu path to follow on e-filing to obtain each of these documents.
Lastly, avoid the audit process: If you have been subjected to a SARS audit it’s easy to understand how agonising this experience can be. Now imagine if SARS could make you pay for the resources it had to spend in putting you through this trial. The harsh reality is, it can. When you submit, do it right and don’t rush. It could save you a lot of energy and time in the long run.
On the opposite side of the scale, not everyone needs to submit an income tax return. Individuals do not have to submit an income tax if their total employment income for the year is less than R350 000.
With more than four million taxpayers submitting their income tax returns during tax season, it represents the biggest annual engagement between SARS and taxpayers. And the pressure is on to submit employment income with the harsh penalties and new collection target. Taxpayers are encouraged to use eFiling to submit their tax returns since it is quick and easy to submit a return and is available 24 hours.
About the Author: Nestene Clausen, founder of The AuditPRO, has served the public as a Chartered Accountant for the past 10 years. AudiPRO has firmly established itself as one of South Africa’s most trusted and renowned auditing firms catering to the nation’s small and medium sized businesses providing specialist assurance, advisory, accounting and tax services. In Nestene’s book, Tips, Tricks and Checklists from a Tax Practitioner, she provides helpful checklists and insights to taxpayers who are preparing to submit their South African Income Tax Returns in friendly non-accountant terminology that anyone can understand. The book is available on Amazon.com