Tax season is here. . . do not procrastinate
There is a general trend to delay the submission
It is often said that there are two certainties in life, namely death and taxes. There seems to be tax on everything. There is tax on our income, tax on some grocery items, tax on petrol, and yes even tax on death.
There is a general trend among South Africans to delay the submission of their tax returns. This procrastination leads to unnecessary penalties. There are lawful structures in place leading to you not paying tax. It can be done using tax avoidance methods.
These are legal ways a taxpayer can reduce the amount of tax that he/she owes. Tax evasion, however, is when a taxpayer illegally avoids paying tax and can get a taxpayer into serious trouble.
Tax avoidance when properly structured, could result in a windfall refund from SARS. The tax season for individuals opened since 1 July 2018. Deadlines for submission of tax returns are looming large. For example the deadline for manual filling by post or at SARS branch for provisional and non-provisional was 21 September 2018.
e-Filing or Electronic filing at SARS branch for non-provisional taxpayers is 31 October 2018. The deadline to e-File for provisional taxpayers is 31 January 2019.
The other reason most of us dread the tax season is due to some intimidating jargon related to tax matters. Let me explain a few terminologies. Most of SA individuals are non-provisional tax payers who are salary earners are and have no other sources of income.
Provisional tax payers are people who earn income other than a salary/remuneration. If you get income such as rental income from a property, interest income from investments or other income from a trade, you will always be a provisional taxpayer, even if you also earn a salary.
There are some provisions and procedures that need to be followed to ensure that you are compliant and not contravening the law. First of all in order to file your tax returns you need a tax reference number.
SARS will not provide your tax number to another person, unless the person is your tax practitioner or has power of attorney to conduct your tax affairs. Failure to submit tax returns will attract penalties.
The minimum penalty for an individual is currently R250 per return per month. This means that where four tax returns are outstanding, a minimum penalty of R1 000 per month will be issued.
You may take advantage of some clever ways to get your filings in order and save money when you submit your tax returns.
For example up to 27.5% of taxable income, capped at R350 000 per year, may be deducted from your income in respect of retirement annuity and retirement funds contributions made before 28 February 2018.
In March 2015 the government introduced a tax-free investment product to encourage us to save our after-tax money.
You can invest R33 000 per year (up to a maximum of R500 000 over your lifetime) and benefit from growth free of dividends tax, income tax on interest and capital gains tax. ■
Sekese, the 2016 Financial Planning Institute (FPI) media award winner, is a registered financial planner professional and a member of the FPI