Your favourite Tax Guide for seniors is back – 2024-2025

The tax year 2024 has just ended and the 2025 year budget has brought no tax relief,
as the fiscus requires more taxes to be collected to assist to ‘balance the books’
and provide our country the necessary funding to address the various grants,
health and education citizen’s needs.

We, the tax abiding citizens continue to contribute to record tax collections
for SARS in the 2023/2024 government financial year
and expect more in the 2025 year!!

We need to be diligent and maintain our tax records/ file with receipts, payments, and all tax papers we have been sent by third parties. In the next few months, these third parties will be providing the tax certificates for the 2024 tax return submission. Importance of these tax certificates should be to cross reference with your own records to ensure ‘snap’ as SARS have been provided them and they are prepopulated on your tax returns.

We all now know “ AI-Artificial Intelligence” do you remember Star trek / Star Wars movies?  Now SARS is using this to ask a few questions or even confirm if the tax certificates at hand are meant to be more in disclosure. The world of Bitcoin/ crypto and related investments are being watched by “Eagle eye SARS”

We certainly have inflationary challenging times and the reserve bank is not easing up  with their stance, food, fuel, medical, electricity, and the never ending load shedding or water outages.  However, we still need to be tax compliant and start the process for the completion of the 2024 tax return.

The 2024 tax year

The last tax year was from 01 March 2023 to 28 February 2024. As investment income interest rates remain higher, and at the same time medical related expenditure cost more, as benefits by medical aid are reduced or limited further. Your financial planners would have adjusted your investment portfolios, resulting in a different tax outcome, which would include capital gains tax on any adjustments to your investment portfolio such as unit trusts, shares or crypto.  Yes, certain financial houses have an element of this in the mix of it.

The new tax season

The tax season normally started on 01 July 2024 to around the 23 January 2025. However, taxpayers who are not provisional taxpayers will have to file their returns no later than 20 October 2024. SARS has yet to set the dates for the tax season, but the last two years have been very similar, a day or two difference.

Auto Assessments

The SARS auto assessment is now about 4 years on and with AI, we expect SARS to set out more of these assessments in the future. The auto assessment is based on what SARS has received from third party data, and them using AI to add on if they do not receive the relevant data from the third parties.  Based on this, the tax assessment has been prepared without a need to file a tax return. No further action is required by you.  However, should you, after reviewing this auto assessment, establish further income or tax deductibility, then you need to know that a 40-day timeline has been set down by SARS to amend your tax return. In time, we do see SARS imposing penalties on under declaring taxable income with these Auto Assessments. Of course, they will not allow tax deductions too if the 40-day rule applies. It is very important to study and ensure the corrections of these Auto Assessments!!   Yes, the investment houses and medical aid companies are obliged to send this data to SARS. We do expect SARS to work for us!!

Out- of- pocket medical expenses are not processed by your medical aid and will not be included in the third party data information that SARS would have obtained.  Donations to charities are also not included in this third party data information. 

How to complete your tax return 

For those taxpayers that do not get Auto Assessments, here’s how to complete your tax return.

The first thing to ask is whether you need to complete a return. SARS increased the threshold for the completion of tax returns to R500 000 in the 2020 tax year. This announcement caused (and still causes) huge confusion among the citizenry.

What this actually means is that, if you only earned salary income from only one employer in the tax year; and that income was below R500 000 then you don’t have to submit a tax return.  In other words, it is not obligatory. Any deviation from this and you must submit a return.

If you did earn any other income e.g. interest or rental income, no matter how little, and your total income is under R500 000, then sadly you must submit a return. So the exemption only applies if you only earned salary from only one source and earned no other form of income.

There is always a but in tax, of course. Even if the threshold applies to you, you may still choose to submit a return if you think you may be due a refund. The most common instance being, if you contributed to a retirement annuity in the year, the chances are you will be due a refund. Also, if your employer was not completely accurate with the PAYE deductions, you may be due a refund. And finally, if you received a travel allowance, you have already been taxed on most of this, so most likely you will be due a refund – but you MUST submit a logbook of business mileage.  This is not negotiable. The logbook detail must have in it the purpose of the trip and who did you go to visit and why. Yes, it’s like climbing Mount Everest but when you have done it, it will feel like a huge achievement!

Basically, if you’re not really sure, it’s better to submit, than not submit.

Efiling profile

For those of you submitting a return, you will need to establish whether you already have an efiling profile – this is a user name and password for you to access your on-line tax return. If you have never done this before, you will need to register for efiling. SARS has made this process simpler, and this should not necessitate a visit to SARS. I would recommend asking a tax practitioner to assist you with this.

Tax practitioners

A tax practitioner can save all the hassle by ensuring all relevant documentation is present.  They have confirmed virtual appointment times, so you Do Not require to stand in long queues!

If your tax return was previously done by someone else, either they hold your personal efiling profile, or you fall into their client database which means you are one of a thousand clients on their business efiling profile. In such cases, you must request the transfer of the profile to yourself. Another option, if you feel the need to control this process is to request shared access with the tax practitioner.

Efiling

Now you are ready to do your bit for your country!! Remember, you need to be declaring everything relevant in the period 1 March 2023 to 28 February 2024.

Log-into efiling with your username and password. The first thing that will come up is the so called Wizard (this is not a reference to the Game of Thrones or Harry Potter). It is a pre-screening questionnaire about your personal tax affairs. By properly completing these questions, the subsequent screens will be customised to suit your personal tax situation.

You will be asked if you were unemployed for any period in the year. A “Yes” response will trigger a request for the periods of unemployment

Did you earn any income that is on an IRP 5 or IT 3a? If so, you will be asked how many of these you received from your employer(s). This should already be on the efiling system, so check that what you have conforms with what is on the system – make sure it covers the correct period i.e. 2024 tax year

Travel allowance and logbook

If you received a travel allowance which is reflected on your IRP 5 (code 3701), you will be asked to submit a logbook. As stated before, you will have already been taxed on most of this allowance, so you are most likely due a refund, but there is no chance of receiving it without a logbook. The logbook must specify the make of the car, the year of registration, the registration number, the cost, the dates of travel with opening and closing mileage, where travelled and why travelled.

Medical expenses

Did you incur any medical expenses including medical aid contributions? If so, you should have received a medical aid certificate from the medical aid. This should already be on the efiling system, so check what you have on the physical medical aid certificate with what is on the system. Make sure it is the 2024 certificate. There is also a space on the return to capture medical expenses not covered by medical aid. For this you will need to have copies of the invoices and proof of payment of these expenses. If you cannot provide this, your claim will be disallowed. A new procedure by SARS in that the claims not paid by the medical aid and which are on the medical aid tax certificate is no longer being accepted by SARS as ‘afait accompli”.  We suggest if your tax return is reviewed or auto assessed, make sure that “ALL MEDICAL EXPENSES” are accounted for.  The review should include a full detailed report from the medical aid on the claims not allowed/ disallowed by them. Currently SARS impression is that we are ‘ double dipping’ by claiming through the medical aid/ or gap cover and trying to get the tax regime to pay back to us what has been paid by the gap cover or medical aid…. We are law abiding tax citzens!!

Retirement annuity

Did you make any contributions to a retirement annuity? If so, you should have received an IT3f (or more than one) from the relevant institution(s). This should already be on the efiling system, so check what you have on the IT3f with what is on the system. Make sure the IT3f certificates are for the correct tax year. The percentage of tax deductibility is 27.5% of your taxable income limited to R350000 per annum. If you were to contribute more than R350000 the excess amount is carried forward and utilised in future tax years.

Investment income

Did you earn any investment income (interest, dividends etc)? If so, you should have received an IT3b (or more than one) from the banks, unit trusts, asset managers etc. Make sure the IT3b certificates are for the correct tax year. There are various codes on these forms, so ensure you capture the correct figures against the correct codes e.g. code 4201 is local interest; code 4238 is income from REITs; code 4118 is foreign interest; code 4116 is foreign dividends etc.

There is a separate place to fill in your dividend income – the Wizard has a question in this regard, and you will find this information on your IT3b

Public Benefits Organisation

Did you make any donations to a Public Benefits Organisation (PBO)? You can claim such deductions but only if you have a S18A certificate from the organisation which clearly reflects their PBO number. Without this document you cannot claim the donation. The tax form requires you to enter the donee’s PBO number.

Capital Gains

Did you make any capital gains in the year? If so, you should have received an IT3c from the bank, unit trust, asset manager etc. Make sure the IT3c certificates are for the correct tax year. You may also have made capital gains which is not reflected on an IT 3c, for example, the sale of your house or a second property. You will need to record the sale value and the original cost of these assets. The cost can include any subsequent costs you may have incurred in improving the asset.

Running a business?

Did you earn any income from running a business? If so, you need a summary of all the invoices issued and a list of all costs incurred in the production of this income. Remember, if you are VAT registered, both the income and the claimable costs must exclude VAT. If you are not VAT registered, you can claim the full cost including VAT

Renting out property

Did you rent out any property for reward? This includes Air BnB or occasional renting out your home e.g. over the December holidays. Please take note that SARS has at hand this information too, but will not have prepopulated in the return!

• If so, you will need to report 100% of the rental income received and reflect any costs you wish to deduct e.g. insurance, cleaning, repairs and maintenance, bond interest, bank charges, body corporate levies, municipal charges etc.
• If the property is only partly owned by you, there is a space to indicate what percentage you own and then the system will calculate your percentage of the profit or loss from rent

Contributions

Did you make any contributions, or did you have any tax free savings accounts? If so, you should have received an IT3s from the relevant institution. Complete this section using the codes on your IT3s

Income from a trust

A select few of you may have received income from a trust. If so, it is important that you receive a statement from the trustees indicating what you received broken down into the various income items distributed by the trust (interest, rent, business profit, capital gains, dividends etc)

The home office

Don’t forget the home office claims, even if you only have a salary, and your employer requires you to work from home.  Covid-19 has changed how we work in a virtual world.  However, SARS is seriously scrutinising this claim.  The SARS Commissioner announced recently that SARS disallowed 62% of these claims in the 2021 tax year.  Sad indeed, but again it is how the taxpayer is setting out the claim and the follow up by SARS.

A few pointers here – take a 360-degree photo of your home office.  Make sure it is an exclusive area and that your time spent in it is more than 50%.  Also obtain a letter from your employer confirming that you are required to work from home.

Solar Panel Tax Incentive

This incentive is specific for the 2024 tax year. Individuals who install rooftop solar panel(s) can claim a rebate of 25% of the cost of the panels, up to a maximum of R15000 per taxpayer.

Personal Assets and Liabilities (including Foreign Assets & Liabilities)

Should you be in business as a sole proprietor, independent contractor or you have market assets exceeding R50 million (there might be a few politicians/ citizens having  wealth) are required to complete the assets and liabilities as set out per the tax return.

Foreign income

Foreign assets that produce income, property, foreign dividends, foreign interest is taxable in the hands of the RSA taxpayer. Yes, double taxation agreements are in place, but you need to declare them on your RSA tax return.

The foreign employment subject to the 183 days rule, the tax free abatement is currently R1,250m and we recommend this is further discuss with a tax practitioner.

Conclusion

These are the most common items on tax returns. There are other questions on the Wizard, but likely they will not apply. If you are unsure, feel free to contact a tax practitioner for advice – most of us love to take the battle on and get the fair result!

Article by:

Frank Bold, Tax Practitioner
FTB – Financial, Tax and Business Administrators (Pty) Ltd
Tel:  021 555 1686
Email:  frank@ftb.co.za
Address: Unit GO3, Millvale House, 6, Millvale Road, Milnerton 7441
PO Box 7955, Roggebaai, 8012

If you would like to contact FTB – Financial, Tax and Business Administrators (Pty) Ltd then please complete the below form and they will get back to you as soon as possible.