Tax filing season will soon be upon us. Not everyone is required by law to submit a tax return, but SARS does know where you live and most likely how much you earn, so they’ll be expecting their dues! Who needs to submit a tax return, and do I need to submit a tax return?
SARS updates the guidelines on their website each year for people who are unsure about whether or not they need to submit a return. It’s a very easy tool to use and comprises of some “yes / no” type of questions.
The general theme to date is that if you’re simply a salaried employee, who earns below a certain amount of income per year (2020: R500 000), and you don’t earn income on the side, are not planning on claiming any deductions for things like medical aid and retirement annuities, and didn’t receive a capital gain above the annual abatement amount of R40 000, then you would not have to submit.
This is because all employers are required by law to submit your salary info and PAYE withheld, directly to SARS twice a year. If your situation is quite simple and uncomplicated, this employer submission is enough for SARS to gain comfort that they’re getting the tax they’re due, direct from your employer.
Who needs to submit a tax return?
Basically, if you don’t meet the conditions above. Thus,
- if you earn more than R500,000 per year,
- you earn income from more than one source, even if the total is less than R500,000,
- you want to claim deductions for your RA or medical aid,
- you’ve received capital gains of more than R40,000,
- you hold foreign currency valued at more than R250,000.
How much do you have to earn to submit a tax return in South Africa?
If you earn more than R500,000 per year in South Africa, you will have to submit a tax return. As you’ve seen above though, earnings is not the only condition linked to filing a return with SARS.
No tax return needed
If you feel comfortable that you don’t need to submit, then that’s great. Relish in your uncomplicated life, but realise that you may be missing out on potential rebates due to RA Contributions or Medical expenses.
It is worthwhile considering the benefits of being knowingly compliant and up to date with SARS on all your returns, even if you feel like you might not have to have submit a return. As much as we like to think that we need only interact with SARS for a momentary crossing of paths during tax season, there are times when you’ll need something from SARS.
SARS issue what is called a tax compliance certificate. Think of it as a certificate of good standing. It is used for all sorts of reasons, including evidencing your tax number, applying to send money offshore, as well as evidencing that you are in fact registered with SARS which is often a requirement when looking to secure loan or mortgage funding.
It may be worth filing a tax return just to be on the safe side and ensure that all is in order.
How to submit a tax return
Register on the SARS eFiling website and log in.
There are currently issues with the eFiling site that still uses a now non-supported Flash-based forms. They have created a browser to circumvent the issues. Even though there may be security issues with this, it is still much easier than actually going to the SARS offices to fill in a manual form. Personally I still use the eFiling site.
Open your current tax return and complete the initial questions. The answers you provide will determine the sections of the form that is displayed as well as the validation process when submitting.
If your finances are relatively simple, then completing the tax return yourself should be easy. All the PAYE that your employer had withheld from your salary over the tax year, should already be reflecting on your tax return. Most of your details should already be in the system and it’s a matter of reading each question carefully and determining what to capture.
What do you need to file a tax return?
Everyone’s circumstances are different, but you should try to have the following documents on hand:
- all your IRP5’s (certificate showing all income and tax deductions for the year from your employer),
- tax certificate from your medical aid,
- any valid medical claims not shown on your medical aid tax certificate (see medical tax credits),
- tax certificates from all the banks that you deal with (showing your interest earned for the year),
- tax certificates from all investments,
- your home loan statement (if applicable),
- details of your assets,
- other financial information that may apply.
When completing your tax return, you will need the details from your tax certificates. So if for example you are completing the field for “Local Interest”, tax code 4201, you will need to tally up all the local interest earned from your bank accounts and investments. Your tax certificates usually show the corresponding tax code, but if not, find the term.
You can use an Excel sheet to sum up all the tax codes and amounts.
If you don’t ask, you don’t get
In order to receive any refunds from SARS, you will need to be assessed. That’s just an official word used to say that SARS are in agreement with the fact that what you owe them, or they owe you, is correct. If you don’t submit a tax return, you cannot be assessed. No assessment, no refund.
Need help with submitting your tax return?
If your finances are a little complex, or you simply don’t feel comfortable filing your tax return, get help! There are many tax professionals who can help! The cost is often worth it when you consider the time that it will take you, as well as the potential tax savings.
There aren’t too many options to save tax if you’re a salaried employee. Freelancers, contractor, or business owners however have many tax considerations and it is definitely worth it to get a professional to assist.
Be wary of simply using your Uncles friend though. You may save money and they may do the work for cheap (or free), but do they know what they’re doing? Rather find a professional and pay a professional fee. Making false claims on your tax return is punishable by law and even if someone else completes your tax return, you are liable and responsible to SARS. Don’t mess it up.