Non-Provisional Tax Return Information
/Thank you to everyone who have sent their tax documents already. We have saved them and have started preparing your returns for filing.
The tax seasons opens on the 1st of September and we only have until the 16th of November to file non-provisional taxpayers tax returns electronically.
Please send your information to us if you would like us to file your tax return; the sooner the better!
SARS has now rolled out auto-assessments for individuals who only earn employment income and have other relevant source income and expenses like retirement annuity and medical aid.
This means that SARS will do an assessment based on information that they have obtained from your employer, medical aid provider, retirement annuity company and financial institutions.
If you agree with the outcome, you can simply accept the assessment and either pay the tax liability or receive a refund.
IMPORTANT: It is more important than ever before that your taxpayer information is correct at SARS including your bank account details. If your bank account details are incorrect, you will not receive your refund. It is also important to make sure your email address and contact details are correct to ensure you get the relevant communication from SARS. This is crucial since if you do not respond to the assessment, that SARS will accept your ‘no response’ as acceptance and go ahead after a period and process the assessment. This might mean you have a tax liability that you do not necessarily agree with.
From Anlo’s point of view, auto assessments are not necessarily a bad thing, but they can be problematic if taxpayers do not respond and act accordingly.
There are several things that need to be considered and explained to ensure you as the taxpayer don’t get in a pickle:
1.) We prepare EMP501’s and IRP5’s for employers, and we know that mistakes can creep in due to poor communication and misunderstandings, so do not just accept your IRP5 as correct. Employers sometimes have problems with their finance function and the payroll is sometimes just not prepared properly. Where this happens, we have to jump in at the last minute to correct submissions and represent the employer at SARS. If this does happen to your employer, the IRP5 that was sent to SARS might be incorrect and will affect your assessment. These errors can lead to significant inaccuracies and there is a good chance that you will be completely unaware of any issues unless you check the numbers carefully before agreeing to them.
Suggestion: Get your IRP5 early and take time to understand the information on it and make sure you agree with everything on the document. If necessary, sort it out sooner rather than later.
Incorrect IRP5’s have always been an issue and we have had so many discussions with taxpayers over the years where they don’t understand where information presented on their IRP5 comes from; ultimately we have to ask them to contact their employer to sort out any underlying issues.
Pumeza at Anlo say’s “this can delay the tax submission unnecessarily and cause emotional distress.”
2.) Financial institutions report to SARS on interest and investment income you have earned during the financial year. Make sure you get all your certificates (you can download them via internet banking) and query any concerns you might have. Remember that these certificates could be for investments you may have forgotten about!
Suggestion: Every individual receives an investment exemption, make sure your investment income doesn’t go over the exemption, because if it does you might be liable for penalties and should possibly have been registered for provisional tax.
3.) If this is your first year getting an auto assessment and your tax affairs are not as simple as displayed on your tax assessment, you might want to get some help to ensure you don’t miss tax deductions or accept your return incorrectly. Here are some examples of where you might need help:
a) Additional medical aid deductions and disability expenses. Medical costs in South Africa are exceedingly high and if you have dependents, especially disabled dependents, this deduction will be missed if you paid additional expenses that did not go through your medical aid. So, make sure you have all your additional expenses that are allowed and not already claimed through your medical aid, and get this tax deduction.
b) Dividend income. If you receive dividend income from your company, you must include this on your tax return even if you have paid the dividends tax already on this income (it won’t be taxed twice). This ensures that if you ever send your tax assessment to a financial institution to obtain finance, your full income is reflected. This also makes sure SARS does not confuse dividend income with other income and does an additional assessment for income that is reflected in your bank account.
c) Property Income. If you have recently started renting out your property or receive rental profits, SARS will not know about this and will not include this information on your tax return. This means that if you click accept on the assessment and do not include the additional income and SARS finds out about it, you can be in serious trouble.
d) Travel Allowance. If you receive a travel allowance, you should include any relevant business travel in your tax return and support this with your travel log. If you do not include this, you will lose out on an important tax deduction and pay more income tax.
Esmerelda at Anlo pointed out that SARS has recently insisted on proper reasons for business travel to ensure that it complies with the tax requirements. This means that the travel log should be filled in correctly and with as much detail as possible.
e) Donations. Donations made to a registered charity for which you have a section 18A certificate will also not be included in this auto-assessment. So please make sure you have your certificate (and if you don’t have it yet, request it because this is not necessarily something charities automatically send out) and make sure you get this tax deduction by filling in the form.
f) Married in community of property. If you are married in community of property and you earn investment income, but the bank account is in only one person’s name, the full interest income will be included in that taxpayer’s auto assessment. This isn’t correct because if you are married in community of property, both tax payers should get the tax exemption.
g) Commission income. If you earn commission income on your IRP5 and that commission is more than 50% of your total income, you are allowed certain deductions. If you accept the auto-assessment without including expenses, you will lose out on valuable tax deductions.
h) Section 12J. If you have made any investments in a section 12J venture capital fund you should include this in your tax return.
i) Capital Gains. If you have sold any property or assets, you need to fill this into your tax return. SARS will not know about this and if you omit it from your tax return SARS can get quite upset 😊
j) Immigrated. If you have recently immigrated or live abroad, you should review your auto assessment carefully because certain information needs to be disclosed.
k) Foreign income. Obviously if you have earned foreign income and/or comply with section 10(1)(o) exemption, you should not just accept the auto-assessment. You need to ensure that your exemption is filled in correctly and that you get the full tax benefit.
Auto assessments have been brought in to assist SARS staff so that taxpayers do not need to visit a SARS branch to file their tax returns. From our experience over the years, the South African revenue service does not necessarily understand your individual tax situation and will not attempt to understand it unless you explain it and present the correct information.
If you are worried that your tax affairs will not be represented accurately, make sure you seek professional advice, even if it is for the first year of submissions. Be prepared and have all your documents ready, because it is difficult to object or even appeal an assessment if you have accepted an incorrect assessment. In that situation you need to have the correct documents to support the incorrect information! Obviously, this is not impossible 😊 but it takes times to resolve the issue.
MOST important – If you have clicked accept on your auto-assessment and you are to receive a refund, do not spend this too quickly. Wait until you have received a final completion letter from SARS, or you are 100% sure your assessment is correct. SARS has the right to re-assess you if new information has come to light that changes your tax situation.
Annja at Anlo says that she is worried that taxpayers just click accept on their auto assessments and that in a few months realise just how incorrect it is and will need expensive professional assistance to resolve the matter.
We found this article to be particularly useful.
If you would like to speak to us about your tax affairs or need help filing your return, please do not hesitate to contact us.
