What to know about filing your tax returns
When you start earning money, the revenue service and its rules can seem confusing. Here are six key things to note
PAYING tax can often seem extremely complicated, but these days the South African Revenue Service (Sars) makes it much easier to understand
HOW DO TAX YEARS WORK?
The tax year covers a slightly different period than the ordinary calendar year. It starts on 1 March and ends on 28 February, except of course in leap years. This means you are taxed, for example, on the income you earned from 1 March 2021 to 28 February 2022. This period is called the 2022 year of assessment.
AM I LIABLE FOR TAX AND HOW MUCH?
Usually this changes every year. In the 2022 assessment year you’ll be liable for income tax if you’ve earned more than: S R87 300, if you’re under the age of 65. S If over 65 but younger than 75, the tax threshold (in other words, the amount above which income tax becomes payable) increases to R135 159. S For taxpayers aged 75 and older the threshold is R151 100.
The amount of tax you must pay depends on several factors, and submit your tax returns.
But when you’ve just started working and have to register as a taxpayer it can still seem overwhelming. We answer six of your questions on the subject. for example your earnings and age. Therefore tax is different for every individual. Sars applies sliding scales, which are listed on their website. The rate for people who earn R216 200 and below, for example, is 18%.
Your employer’s human resources department can help you to nderstand this, or you can ask an accountant or call a Sars branch to explain it to you.
WHAT DOES MY EMPLOYER DO?
They hold back the tax that’s payable on your salary and pay it over to Sars every month. It means you don’t have to do it yourself. It’s called employees’ tax and is usually indicated as PAYE (pay as you earn) on your payslip.
Certain amounts may be deducted from your salary before employees’ tax is charged, such as the amount you may save for your pension, medical aid contributions and certain insurance premiums.
You must make sure you’re registered as a taxpayer, submit your tax return annually and ensure you’re paying your tax if your employer doesn’t automatically do it for you. S There are three ways to register as a taxpayer: 1 You can register on Sars’ free electronic tax filing service, eFiling, and if you don’t yet have a personal income tax number Sars will register you automatically and issue it. You can also do this on the MobiApp. You must be in possession of a valid SA ID document. 2 Your employer can register you for eFiling. 3 You can do it personally at your nearest Sars branch but remember visits may be restricted during the pandemic. S You must submit your annual return between July and November. For people with their own businesses or companies the submission period is slightly different, for more info check www.sars.gov.za. You may submit your return with the help of an accountant or do it yourself on eFiling. The website outlines the steps. It also tells you what supporting documents to submit, for example proof of medical aid contributions. S Even if you are paying tax and are registered as a taxpayer, you don’t always have to submit an income tax return. People who comply with all of the below don’t have to submit returns: S Your total income or salary for the year before tax (gross income) didn’t exceed R500 000 (March 2019 to February 2020). S You earned your income for the year from only one employer. S You don’t have a car allowance, company car, travel allowance or any other income, for example rental income. S You don’t claim tax deductions for medical expenses or retirement annuities (not the pension contributions made by your employer).
MUST ADDITIONAL SOURCES OF INCOME BE DECLARED?
Yes, you pay tax on any additional earnings. This would apply, for example, to income from a business like a side hustle, trusts, investments and rental income.
WHAT HAPPENS IF YOU DON’T SUBMIT YOUR RETURNS ON TIME?
You pay a fine and it becomes more expensive the longer you delay submitting. A set monthly amount, based on your taxable income, is levied as an administrative non-compliance fine – it can be between R250 and R16 000 a month. This is incurred for every month you don’t submit after the deadline, for a maximum of 35 months.