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Tax Guide for South African Seniors – 2021

Posted By Marilynh / July 27, 2021 / 0 Comments

Don’t stress!  Don’t tax your brain!

Just check out this great Tax Guide for SA Seniors!
All you need to know about how to complete your tax return!

 

Seniors Tax Guide 1200

 

It’s once again when Caesar ( SARS) call on its citizens to file their tax returns and that we do our tax duty for our country.

In such a challenging time and in the midst of a pandemic, we do need to make sure that the completion of the tax return is not incomplete.

The last tax year, being March 2020 to February 2021, the additional medical related expenditure and the reduced investment income (because interest rates had dropped due to the Covid-19 saga) could result in a different tax outcome and possible substantial tax refunds or even a reduced tax liability.

The new tax season

The tax season started on the 01 July 2021 to 31 January 2022. However, taxpayers who are not provisional taxpayers will have to file their returns no later than 23 November 2021.

A new feature in this tax season

A new feature in the tax season is Auto Assessments done by SARS. The auto assessment is based on what SARS has received from third party data.  Based on this, SARS has prepared the tax assessment, without a need to file a tax return.  Yes, the investment houses and medical aid companies are obliged to send this data to SARS.  You can either review to check the correctness of SARS accuracy, or you can amend the return and press the button.  SARS does work for us!!

As this new tax feature is in its infancy stage, we do recommend you review it.  The out- of-pocket medical expenses have not been processed by your medical aid and will not be in the third party data information that SARS have obtained.  The same applies to donations to charities. 

 

Tax return

 

Taxpayers that do not get Auto Assessments
– How to complete your tax return

The first thing you need to ask yourself is whether you actually 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 amongst the citizenry.

What this actually means, is 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 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.

Of course, there is always a but in tax. 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.  However, you MUST submit a logbook of business mileage – this is not negotiable. The logbook detail must have in it the purpose of the trip, who did you go to visit and why. Yes, it’s like climbing Table Mountain, but when you have done that, what an achievement!

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

What do you need if you are submitting a return

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  should not necessitate a visit to SARS. I would still suggest asking a tax practitioner to assist you with this.

How does a tax practitioner help?

A tax practitioner can save all of the hassle by ensuring all relevant documentation is filed.  A tax practitioner also already has confirmed virtual appointment times, due to Covid-19.

 

Senior couple - tax - 1200

 

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. If you feel the need to control this process, you are at liberty to request shared access with the tax practitioner.

Now, you’re ready for 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 2020 to 28 February 2021.

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 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.  Check that what you have conforms with what is on the system – make sure it covers the correct period i.e. 2021 tax year

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.  However, 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.

 

Tax return - Seniors - 1200

 

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.  Check that what is on the physical medical aid certificate correlates with what is on the system. Make sure it is the 2020 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 those expenses. If you cannot provide this, your claim will 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.  Check what you have on the IT3f correlates with what is on the system. Make sure the IT3f certificates 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

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 actually requires you to enter the donee’s PBO number

 

Tax

 

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. 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

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

And 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)

 

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 address Caesar and take him on and get the fair result!

 

 

Author:  Frank Bold
Tax Accountant, FTB Administrators
Unit G03, Millvale House, 6 Millvale Road, Milnerton 7441
Tel:  021 – 5551686
Email:  frank@ftb.co.za

 


 

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