This article was first published in the second quarter 2016 edition of Personal Finance magazine.

Tax never seems to get any easier – all the more so if you have tax obligations beyond the personal (perhaps you own a small business or are a trustee of a trust) or are a provisional taxpayer. Then there are the inevitable changes that are announced in the Minister of Finance’s annual Budget Speech.

Even if you employ a tax practitioner to help you, you can avoid a lot of anxiety (and possibly panic) if you take a systematic approach to recording your income and outgoings and apply the system from the start of each tax year. It sounds tedious, but it could save you much uncertainty and ensure you are well prepared for your assessments.

1. Establish where you fit into the tax universe

At the beginning of the tax year, ascertain exactly what your obligations are. How many taxable entities are you responsible for? Just yourself, or other entities, such as trusts and companies, as well? What taxes must be covered in respect of each entity? Income tax alone, or, for example, value-added tax or pay-as-you-earn (PAYE) tax?

In respect of income tax, do you earn remuneration only, or do you receive other types of revenue? List the expected sources of income, as well as any possible capital gains. This is useful as a checklist when the time comes to submit returns.

Tax definitions and thresholds change from time to time – for example, an individual whose taxable income does not exceed the tax threshold may not have to pay provisional tax. If you check and find that you qualify for the exemption, you won’t have to submit provisional tax returns.

And there are other exempt categories that change from time to time. The definitions and thresholds are published in the Fourth Schedule to the Income Tax Act and on the website of the South African Revenue Service (SARS),

If you employ the services of a tax practitioner or accountant, it is useful to go through this checklist together to ensure that responsibilities are clearly allocated and to avoid any submissions “falling through the cracks”.

2. Diarise important dates

Set down the important dates for the year ahead in your diary or year planner. This is particularly important if you are a provisional taxpayer. The key dates for any income tax year are the submission dates for provisional tax returns and payments, and the submission of the annual income tax return.

Provisional tax is an advance tax payment, with the first payment due within six months of the beginning of the tax year (the end of August for individuals with February year-ends). The second provisional payment is due on the last day of the tax year (the end of February for individuals). Late payment and underestimation, particularly in respect of the year-end provisional tax payment, can lead to significant penalties.

For companies with taxable income greater than R20 000, or other taxpayers with taxable income exceeding R50 000, interest will be payable where the final tax is greater than the provisional taxes paid. To avoid an interest charge, a voluntary third payment can be made six months after the end of the tax year, or, for February year-ends, seven months after the end of the tax year (therefore the end of September for individuals). This payment will not reduce any penalties in respect of underpaid provisional tax, but it will prevent interest from accumulating.

It is important to check on what day of the week these dates fall – if on a weekend or public holiday, the returns and payments must be made by the last business day before such weekend or public holiday.

SARS publishes the due dates around July of each year, when the online tax returns become available. Keep an eye out for this and diarise the relevant due date. For provisional taxpayers, this is normally towards the end of January of the following year (so January 2017 for the tax year that ended on February 29, 2016).

For other taxes, determine the relevant submission and payment dates and diarise these. For VAT, it could be monthly, or some other interval. For PAYE, it is within seven days of the month end. Note, however, that if those due dates fall on a public holiday or weekend, the payment is due earlier. To avoid late-payment penalties, diarise the specific payment date. This way, if you expect to be away, or out of your normal routine for any other reason, you can make advance plans for payment so that you don’t come back to a horrible surprise.

If you are required to make submissions on behalf of several entities – your own, plus a trust and a company, for example – it is important to keep a checklist of each submission and tick these off so that you don’t inadvertently omit one or more of them.

3. Prepare a tax file or online folder

I set up a lever-arch file at the beginning of the year, but an online folder will work as well. My file has separate sections to cater for:

* My tax return and assessment (once completed);

* Provisional tax calculations, returns and proof of payment;

* Various certificates such as IRP5/IT3s, medical scheme contributions and donations to public benefit organisations;

* Statements from offshore institutions in respect of foreign income;

* Expenses;

* Travel logbook and related expenses;

* Rental income; and

* Capital gains.

With your rental income, keep a record of your expenses (separately in respect of each property, if you have more than one rental property) and include copies of invoices for major expenses. Expense slips tend to fade over time, so it is worth grouping them and photocopying or scanning them.

Certain items may be carried forward from previous tax years – for example, contributions to retirement funds not allowed in a particular tax year. Rather than trying to find details of such items years later, when they are eventually deductible, carry such information forward to your current tax file each year.

The important thing is to get into a habit of organising your data on a regular basis. For example, if you base a travel claim on actual expenditure, get into the habit of storing your fuel slips together. Compiling your tax return is much less daunting when the information is properly organised.

I even keep a tax calculation spreadsheet updated on a monthly basis. I regularly update details of income earned and capital gains realised. I also record all the monthly expenses in respect of my home office and rental properties (such as rates, water, electricity and insurance). In this way, I can ascertain my provisional tax very easily. At tax-return time, it is an invaluable reference, and if your tax is submitted by a tax practitioner, it contains all the information you need to provide to him or her.

4. Gather relevant information timeously

For each of your income streams and expense categories, it is useful to keep a note of all the information you require from others. For example, if you have portfolio investments, your asset manager should provide you with a statement in February, prior to the second provisional tax submission, that sets out the returns for the tax year, at least until the end of January, so that you can make an appropriate estimate of provisional tax. You should also put the asset manager on notice that you need to be informed of any unusually large items that arise in February that may affect your calculation.

If you earn rental from properties that are financed by way of a mortgage bond, it is useful to have a statement from the mortgage lender setting out the interest charge for the year.

If you are investing via an offshore asset manager, try to establish right at the start that you can and will receive information in the necessary format and for the necessary periods required to prepare your South African tax return. A foreign asset manager may provide information at different times if you do not specify and agree on this upfront.

You should make a note to follow up on any outstanding information in plenty of time – say early in February of each year for provisional tax, and again later in the year once the full set of data for the year ended February 28/29 is available – to avoid panic on the deadline date. On the last day of the tax year (the end of February for individuals), note your odometer reading if you claim business travel. Do a stock count if relevant, and farmers need to record numbers of livestock.

It can be useful to determine your assets and liabilities – in other words, have a balance sheet – so that you don’t have to try to recreate this a year later when you prepare your tax return.

5. Keep your capital gains information easily accessible

It is important to keep information about the base cost of your assets easily accessible. This is particularly relevant with a property you have held for a long time, because you could end up paying more than you need to pay if you do not have the necessary supporting information at hand.

Make sure you have all the purchase information (cost of the property, transfer duty and transfer costs). If you don’t have this, get it from the transferring attorney. (Note that this information is not available indefinitely, so don’t leave it for more than five years just because you don’t plan to sell the property.) Keep all the invoices as proof of the costs of improvements. If it is a primary residence, and you let it, or parts of it, at any stage, record the details, because it will affect the primary residence exemption.

If you acquire property other than by way of purchase – such as inheritance, donation, or a CGT roll-over/deferral transaction – obtain the CGT-related information at the time and keep it on file.

Once time has passed, it can be difficult and time-consuming to obtain this information. Put it together when you are not under pressure, so it is available when you need it.

6. Unusual or one-off events and related taxes

Be particularly aware of capital gains made during the year and ensure that these are included in the second provisional tax calculation if you are a provisional taxpayer.

Another one-off tax is dividend withholding tax (DWT) if you own a company, or have shares in a private company. Unlike the case with listed shares, the private company may be required to withhold and pay DWT. Of particular relevance is a loan you may have from your company. If no interest is charged, or the interest is less than the rate set by SARS, the difference between the SARS-stipulated rate and the rate charged could be deemed to be a dividend. DWT is then payable by the company within a month of the tax year end of the company.

7. Some things to do early in the tax year

It may be possible to make an estimate of your August, September and the following February’s provisional tax payments in advance. I like to do this, because it gives me an idea of my personal cash-flow for the year. I refine this as I have more information.

If you earn a salary and claim business travel, check that your travel allowance is commensurate with your expected business travel deduction.

If you own your own company, have a look at the combined tax for you and the company and optimise your mix of salary, dividends and withdrawals on the loan account.

* Kari Lagler is an independent tax consultant and registered tax practitioner. The information in this article is of a general nature, and readers should obtain expert advice for their specific situations.