If you are a resident who pays taxes in South Africa, you may be wondering how to get the most out of your tax returns. In this blog post, we will share some tips and tricks on how to submit your tax returns correctly and claim the deductions and rebates that you are entitled to. By doing so, you may be able to get some money back from the South African Revenue Service (SARS). Let’s get this serious discussion started with something more light-hearted: Why did the vegetable farmer have trouble with SARS? Because they couldn’t “lettuce” keep all their tax records in order! All bad jokes aside, let’s get to business.
What is a tax return?
A tax return is a fundamental document in the realm of personal and business finance that serves as a formal account of your financial activities during a specific period, usually a year. In the context of South Africa, the tax return is a formal submission required by the South African Revenue Service (SARS), the governmental agency responsible for collecting taxes. This process is a crucial component of the country’s taxation system, helping to ensure that individuals and businesses fulfill their tax obligations accurately and transparently.
The tax return process serves several significant purposes:
Income and Expense Declaration: The tax return is a comprehensive form that prompts you to declare your financial activities for the previous tax year. This includes detailing all your sources of income, such as salary, investments, rental income, and more. On the other side of the equation, you are also required to list your deductible expenses, which are legitimate costs that can be subtracted from your total income to determine your taxable income. Deductible expenses might include items like business expenses, medical expenses, donations to charitable organizations, and more.
Tax Year and Dates: The tax year, in the South African context, runs from 1 March of one year to 28 or 29 February of the following year. This specific time frame is essential because it aligns with the country’s financial reporting period and allows for accurate tracking of income and expenses.
Calculation of Tax Liability: Based on the information you provide on the tax return, SARS uses a set of tax rules, regulations, and rates to calculate your tax liability. Tax liability refers to the amount of money you owe to the government in the form of taxes, or conversely, the amount that the government owes you as a refund if you’ve overpaid your taxes throughout the year. Accurately calculating this liability is essential for ensuring that you are paying the correct amount of taxes and receiving the benefits you are entitled to.
Compliance and Penalties: Filing an accurate and timely tax return is not only a legal requirement but also a way to ensure compliance with tax laws. Failure to submit your tax return or submitting inaccurate information can lead to penalties, fines, or even legal consequences.
Government Revenue Generation: Tax returns are a crucial tool for revenue generation for the government. They help allocate funds to various public services and infrastructure projects, such as education, healthcare, transportation, and more.
Data for Policy and Planning: The data collected from tax returns provides valuable insights for the government in terms of economic trends, income distribution, and financial behavior. This information aids in the formulation of policies and plans that can have a significant impact on the country’s economic well-being.
In summary, a tax return is not just a mundane administrative task; it’s a formal declaration of your financial activities that has wide-reaching implications for both individuals and the nation as a whole. It serves as a mechanism for ensuring fair and accurate taxation, supporting government services, and contributing to the overall economic stability of the country.
Who should submit a tax return?
Not everyone needs to submit a tax return. You only need to submit a tax return if you meet any of the following criteria:
– You earned more than R83,100 from one or more sources of income (excluding interest) in the 2022/2023 tax year.
– You earned more than R23,800 from interest in South Africa in the 2022/2023 tax year.
– You earned income from a foreign source while being a resident in South Africa.
– You have any deductions or rebates that you want to claim, such as medical expenses, retirement annuity contributions, donations, etc.
– You have any capital gains or losses that you need to report.
– You received any income or benefits from an employer that was not taxed at source, such as travel allowance, company car, etc.
If you are not sure whether you need to submit a tax return, you can use the online tool on the SARS website to find out.
How to submit a tax return?
There are different ways to submit your tax return, depending on your preference and convenience. The most common methods are:
– eFiling on your computer: This is a free and secure online service that allows you to register, complete and submit your tax return electronically. You can also make payments and access other related services through eFiling. To use eFiling, you need to register on the SARS eFiling website (www.sarsefiling.co.za) and create a user profile. You will need your ID number, bank details, contact details and email address to register. Once you are registered, you can log in and access your tax return form (ITR12) under the Returns tab. You can then fill in the relevant sections of the form, using your supporting documents as reference. You can also use the Help-You-eFile feature, which allows you to get assistance from a SARS consultant via phone while completing your return. When you are done, you can submit your return online and receive an instant confirmation from SARS.
– SARS MobiApp: This is a mobile application that allows you to complete and submit your tax return using your smartphone or tablet. You can download the app for free from Google Play Store or Apple App Store. To use the app, you need to register with your eFiling login details or create a new profile if you are not registered for eFiling. You will then be able to access your tax return form (ITR12) under the Returns tab. You can fill in the form using your supporting documents as reference. You can also upload any required documents using the camera function of your device. When you are done, you can submit your return online and receive an instant confirmation from SARS.
– Filing electronically at a SARS branch: This is an option for taxpayers who prefer to get assistance from a SARS agent in person. You can visit any SARS branch near you and file your return electronically using their computers. You will need to make an appointment before you visit a branch by calling the SARS Contact Centre at 0800 00 7277 or using the online booking system on the SARS website. You will also need to bring along all your supporting documents, such as your IRP5/IT3(a) certificate from your employer, medical certificates, pension and retirement annuity certificates, etc.
What deductions and rebates can I claim?
One of the ways to reduce your tax liability and get money back from SARS is to claim deductions and rebates that apply to your situation. Deductions are expenses that you incurred for earning income or for specific purposes that are allowed by SARS. Rebates are amounts that are subtracted from your tax payable before calculating your final tax due or refund. Some of the common deductions and rebates that you can claim are:
– Medical expenses: You can claim a medical scheme fees tax credit for the fees that you paid to a registered medical scheme for yourself and your dependants. The credit is a fixed amount per month, depending on the number of beneficiaries. For the 2022/2023 tax year, the credit is R319 for the first two beneficiaries and R215 for each additional beneficiary. You can also claim additional medical expenses for any qualifying out-of-pocket medical expenses that you or your dependants incurred and that were not covered by your medical scheme. These include expenses such as doctors’ fees, hospital bills, medicines, etc. The amount that you can claim depends on your age, your taxable income and your medical scheme contributions. You can use the medical tax credit calculator on the SARS website to estimate your claim.
– Retirement annuity contributions: You can claim a deduction for the contributions that you made to a registered retirement annuity fund for yourself or your spouse. The deduction is limited to the lesser of 27.5% of your taxable income or R350,000 per year. Any excess contributions can be carried forward to the next year or deducted at retirement.
– Donations: You can claim a deduction for donations that you made to approved public benefit organisations (PBOs) that are registered with SARS and have a section 18A certificate. The deduction is limited to 10% of your taxable income before the deduction of donations and medical expenses. You will need to obtain a receipt from the PBO that shows the name, address and registration number of the PBO, the date and amount of the donation and your name and address.
– Travel expenses: You can claim a deduction for travel expenses that you incurred for business purposes, if you received a travel allowance or used a company car from your employer. You will need to keep a logbook that records the details of your business trips, such as the date, destination, distance, reason and cost of each trip. You can use the travel eLogbook on the SARS website or the SARS MobiApp to record your trips. You can then use the rates and tables published by SARS to calculate your claim based on your actual or deemed costs and kilometres travelled.
– Home office expenses: You can claim a deduction for home office expenses if you work from home and meet certain requirements.
Check out: How to start making money from home (with your own business).
These include having a dedicated area in your home that is used exclusively and regularly for work purposes, having an employment contract that allows or requires you to work from home, and deriving more than 50% of your income from commission or other variable payments based on your work performance. You can then claim a portion of your rent, interest on mortgage, rates and taxes, electricity, repairs and maintenance, cleaning, internet and telephone costs as home office expenses. The portion is calculated based on the floor area of your home office in relation to the total floor area of your home.
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How to get money back from SARS?
If you have claimed all the deductions and rebates that you are entitled to, and your tax payable is less than the tax that was deducted from your income during the year, you will be eligible for a tax refund from SARS. To get your money back, you need to ensure that you have submitted your tax return correctly and on time, and that you have provided SARS with your correct banking details. You can update your banking details on eFiling or the SARS MobiApp under the Maintain Taxpayer Registered Particulars menu.
SARS will process your tax return and issue you with an assessment notice (ITA34) that shows how much tax you owe or are owed by SARS. You can access your assessment notice on eFiling or the SARS MobiApp under the Returns History menu. If you are due a refund, SARS will pay it into your bank account within 7 working days, provided that there are no delays or audits.
If you disagree with your assessment notice or have any queries about your refund, you can contact SARS through any of the following channels:
– Call the SARS Contact Centre at 0800 00 7277
– Visit any SARS branch near you
– Use the query function on eFiling or the SARS MobiApp
Submitting your tax returns in South Africa can be a rewarding experience if you know how to do it correctly and claim all the deductions and rebates that you are entitled to. By following these tips and tricks, you may be able to get some money back from SARS and enjoy the benefits of being a compliant taxpayer.
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