Why you must do tax returns
At the beginning of October, the SA Revenue Service (Sars) announced that over 2.7 million people had filed their returns already and it had paid over R62.1 billion in tax refunds.
Even though the tax season opened on July 1, some people procrastinate when it comes to filing their tax return. There are a few factors that these procrastinators need to consider when reviewing their tax situation.
Nico Coetzee, executive: PPS Financial Planning, says people must realise they can only get a refund if they file their return.
Why you need to complete your tax return
A tax clearance certificate will only be issued if your tax returns are up to date.
Deadlines
Sars has implemented various deadlines for the different types of returns. It is beneficial to get some advice to ensure deadlines are met.
Documentation and audits
It is important to provide Sars with all the required documentation.
Income
Review the IRP5 codes to ensure the income declared is actual taxable income. We have seen non-taxable income declared as taxable income. If you do find errors, your employer will have to re-submit your IRP5 to Sars before you submit your final tax return.
Declare all income
It is important to declare all income received throughout the year, even though certain income might be exempt. Other types of income include dividends, interest, donations, foreign income as well as distributions received from family trusts.
Tax deductions for individuals
Sars has limited deductions. But the government still incentivises taxpayers through retirement contributions and tax-free savings accounts (TFSAs). Individuals can contribute up to 27.5% of taxable income to a retirement fund, up to R350 000 per year. Individuals can also contribute up to R33 000 per year to a TFSA. Both these investments will grow tax free.
Home office expenses
Ensuring you can deduct home office expenses can be complex. Your contract with your employer must state you can work from home; more than 50% of working time must be spent at home and an area must be equipped for it. Expenses that can be deducted include rent, interest on bond, repairs, rates and taxes, cleaning and wear-and-tear based on the pro-rata office area in your home.