How to cope with changes to your tax status
Auto assessment offers some relief
Tax filing season opened on July 1, leaving many income earners anxious. Among the concerns are the prospect of searching for misplaced documents and forgotten receipts, uncertainty about which tax deductions to claim, and how to avoid mistakes that could result in refund delays – or worse, penalties.
The South African Revenue Service auto assessment process offers some relief for those whose tax affairs are relatively straightforward – for example, company employees with a single source of income. Three million non-provisional taxpayers form part of this process this year, and they will not have to file a tax return if SARS is satisfied with the outcome.
The assessments are compiled by SARS using data from employers, banks, medical schemes and others. The assessments are returned via efiling or the SARS Mobiapp.
If you agree with the assessment, and a refund is due, you should receive this payment within 72 hours. If you owe SARS money, you can pay via efiling or the Mobiapp.
Changed tax status
Many people’s work status has, however, changed or become more complicated since the previous tax filing season.
Thousands of people have been retrenched, changed jobs, became self-employed, left South Africa, or taken on freelance work in addition to their regular job. Their personal status may also have changed due to marriage, divorce or parenthood.
In general, it’s worth contacting SARS, your accountant, or a reputable tax practitioner if you are unsure about your changed tax status. This ensures that you get up-to-date advice tailored to your particular situation. The professional’s fee could be covered by the tax savings.
Before choosing a tax practitioner, shop around and ask the following:
• With which professional body are you registered?
• What are your fees, and what do they cover?
• Can you help with objections and appeals if I disagree with the SARS assessment? If so, what do you charge for this?
• Do you allow clients shared access to their efiling profiles?
Tax admin and savings tips
To handle your tax efficiently, you need to be organised, retain your personal and business documents, and store these securely.
Business records: Depending on the type of work you perform, you may be able to claim costs relating to your cellphone, rent, rates, electricity, accounting and tax fees, IT, your vehicle, and any other income-related goods and services. You can only claim the usage that relates to your work, so receipts and records are important.
Remote work: If you’re a South African taxpayer or tax resident, you are liable for tax on your worldwide assets and income. Whether you work in South Africa or another country, you need to report your earnings to SARS and pay tax.
Personal bills: You will need proof of items such as medical bills and interest earned on investments to be eligible to claim against these.
Tax savings: There are many ways to reduce your tax bill, from contributing to your retirement and investing in your children’s education, to supporting your favourite charity, provided it is appropriately registered.
Fraud alert: Scammers may pretend to be a SARS official and ask for your confidential details. Fraudsters may also falsely inform you that you are under audit, or they may make an unauthorised change to your efiling profile using information obtained by phishing.