The very thought of tax is taxing on the brain!
Don’t let the e-filing Wizard (not a reference to Game of Thrones or Harry Potter!) become an insurmountable problem.
Rather check out this A-Z of how to complete your tax return!
How to complete your tax return:
The first thing to ask is whether you actually need to complete a return. SARS recently increased the threshold for the completion of tax returns to R500 000. 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 i.e. it is not obligatory. Any deviation from this and you have to submit a return. If you contributed to a medical aid or retirement annuity, you will need to submit.
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 a but, 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.
So basically, if you’re not really sure, it’s better to submit, than not submit.
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 which will probably necessitate a visit to SARS. I would suggest asking a tax practitioner to assist you with this otherwise you could find that you sit at SARS all day and still fail in your crusade to register because of some missing document. A tax practitioner can save all of the hassle by ensuring all relevant documentation is present and they have confirmed appointment times, which obviates the need to wait in day-long queues.
Requirements for SARS verification
– certified copy of your ID
– Proof of address not older than one month, proof of address can be one of the following:
– signed valid lease agreement (if you use a lease agreement then you will need to provide a copy of the landlord’s ID document, rates account as well as proof of their residential address, and they will need to sign a CRA001 form.
– valid motor vehicle licence form, showing your address
– telephone or large clothing retail account, ie Edgars, etc
If your tax return was previously done by someone else, either they hold your 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.
Now you are ready to do your bit for your country!! Remember, you need to be declaring everything relevant in the period 1 March 2018 to 28 February 2019.
Log-into efiling with your user name and password
The first thing that will come up is the so called Wizard (this is not a reference to 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 what you have on the forms with what is on the system – make sure it covers the correct period i.e. 2019 tax year.
If you received a travel allowance which is reflected on your IRP 5, 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.
The logbook clearly needs to state your travel on a daily basis, ie km for personal travel and km for business travel. Bear in mind that travel from your home to your place of work (office) is not considered to be business travel.
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 medical aid certificate with what is on the system. Make sure it is the 2019 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 may well be disallowed.
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 certifcates are for the correct tax year.
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(s)
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.
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.
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
Did you rent out any property for reward?
This includes Air BnB or occasional renting out your home e.g. over the December holidays
-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
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
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 are semi-human!
Author: Frank Bold
Tax Accountant, FTB Administrators
Unit G03, Millvale House, 6 Millvale Road, Milnerton 7441
Tel: 021 – 5551686