Tips to ensure a smooth personal income tax filing season
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By Yolandi Esterhuizen
During August, many South Africans received auto-assessments for their 2019/20 personal income tax returns from Sars. The admin for the tax year is behind the taxpayers that accepted, or amended and submitted, this assessment and settled any tax still owing to Sars. For those who didn’t receive an auto-assessment, tax filing season is set to get under way on September 1. Note that if you haven’t received an auto-assessment from Sars, you could file immediately and do not have to wait until September 1.
Taxpayers who file online using e-filing have until November 16 to submit their returns. Other taxpayers who cannot file electronically can visit Sars branches with an appointment until October 22. Provisional taxpayers who file electronically have until January 29, 2021.
The year of assessment for an individual runs from the first day of March to the last day of February. The income you should declare on your return is for March 1, 2019 to February 29, 2020.
Here are some tips to make tax season easier for you:
1. Declare all sources of income
Your employer will report your remuneration to Sars and pay tax on your behalf throughout the year. But you also need to declare extra income you make from sources such as side hustles or freelance gigs, renting a property to a tenant, or interest. You will also need to declare capital gains. Sars may already have information available to them submitted by third parties. For example, interest earned, contributions to retirement funds or medical schemes. Confirm the data you submit to Sars is correct by comparing it to the tax certificates, such as an IT3(b), IT3(c) and IT3(s), issued by the financial institution, bank or fund. In most cases, these will be emailed to you, but you can usually also download them from the institution’s online banking or client service portal.
2. Gather supporting documents for any expenses you can claim
Remember to claim any allowable expenses you incurred while you were earning your income. For example, if you received a travel allowance from your employer, be sure to claim your business expenditure otherwise the full amount of the allowance will be taxable. If you rent out a property, some maintenance and running costs may be tax deductible.
If you earn mainly commission or freelance income using your own equipment and facilities (such as computers, tools, phone, home office, etc.), some of the costs you incurred may be tax deductible. Also ensure that Sars is aware of your allowable tax-deductible donations.
Medical expenses such as prescription medicine or doctors' visits that your medical aid didn’t cover should also be indicated on your return as Sars will apply a formula to calculate how much you will be allowed as a tax credit. Make sure you have the necessary statements and certificates to substantiate your claims. It’s a good idea to scan and file paperwork throughout the year and to track your expenses on a spreadsheet or accounting package.
3. Consult with a registered tax practitioner
A registered tax practitioner can be helpful when you’re filing your return, especially if your affairs are relatively complex. He or she might be able to identify legitimate tax deductions that can help you to bring your tax bill down. The practitioner will ensure that your return is accurate which reduces your risk of incurring penalties for filing incorrect information.
By Yolandi Esterhuizen, registered tax practitioner & Compliance Manager at Sage Africa & Middle East