Quick Guide to Filing Income Tax Returns

Tax return season for individuals officially opened on 1 July 2017. If you are a South African citizen, you may need to submit an income tax return to the South African Revenue Service (SARS) over the next couple of months (deadlines to be announced). The purpose of filing an income tax return is for SARS to determine how much money you owe the government or if you're due for a tax rebate.

Filing returns can be an intimidating experience and it's only natural that some people would postpone rather than tackling it right away. But, waiting until the last minute to submit returns can actually lead to more stress, as an article in WebMD suggests. Fortunately, seeking tax advice and registering for eFiling can make it a hassle-free process. Hippo.co.za asked the experts at TaxTim what newcomers and regular taxpayers should know before they start returning their forms.

1. Who should submit tax returns?

According to SARS, an individual is required to pay tax if they earn more than R75 000 per year if they are younger than 65 years during the 2017 year of assessment. If they are 65 years of age or older, they need to earn more than R116 150 per year before they are liable to pay income tax.

“We advise all taxpayers who have earned any money during the 2017 tax year which runs from 1 March 2016 to 28 February 2017 to complete and submit a tax return. Even those taxpayers who have always filed, but for some reason did not earn any income during the tax year, are encouraged to file. It is always best to stay compliant with SARS in the event a taxpayer needs to show a tax history to a bank or lender when asked. It’s also always best to stay compliant in order to avoid any possible penalties in the future.”

2. What documents are required for filing income tax returns?

“Individual taxpayers will need to have their IRP5 form, which will be prepared and submitted to SARS by an employer. This is a certificate that contains all employer/employee-related incomes, deductions, and related taxes. Investors who receive an income need tax certificates known as IT3(b) and IT3(c) from their banks and investment houses.

Documentation related to personal details consists of an original ID or passport, with a certified copy or, if the taxpayer doesn't have an original ID or passport, an affidavit together with a temporary ID/passport, and an original bank statement carrying the bank's stamp which must not be older than three months as well as original proof of residential address not older than three months showing your name and residential address.

Individual taxpayers must also have in their possession a Medical Aid Tax Certificate and proof of any medical expenses that their Medical Aid did not pay for. Further documents required are a logbook for any business-related travel and certificates to charities if they made any donations during the tax year. If a taxpayer used a laptop or cellphone for work purposes and they can show that their employer allowed it, then they need proof of the cost of these assets. And finally, if a taxpayer runs their own business or rents out property and earns rental income on them, they will need all invoices and expense slips as well.”

3. How can self-assessors register for eFiling?

“If you are an individual, you will need to have your tax reference number at hand. Just log onto SARS eFiling and follow the instructions. Make sure to have the most up to date details that are known by SARS when registering. For a step-by-step outline on how to register for eFiling, see TaxTim's article How To Register for eFiling.

Taxpayers who file their taxes themselves must submit a complete tax return, either using an online filing tool or SARS eFiling. SARS will then assess it and return the result by either showing a refund, an amount owing to SARS, or no action required. Sometimes, taxpayers are required to submit their documents to SARS and a refund could be delayed while SARS finalises their audit.”

Filing manually at a SARS branch

“If you prefer to submit your tax return at a SARS branch, it is your responsibility to fill out the IRP5 as completely and honestly as possible. Once completed, you can either mail it by post or place it at the SARS branch's drop box together with the supporting documents.”

4. What happens after a taxpayer misses the deadline?

“SARS can impose penalties of up to R16 000 per month for missed returns, which also accumulate interest if not submitted on time.”

5. Any tips from TaxTim?

“When completing a return, it’s always best to make sure that you have all the supporting documents at hand in case SARS asks to verify them after submission. Make sure to not put in cents in form fields when not required as this can cause complications and delays. Finally, read all instructions carefully to avoid getting into trouble with SARS.”

6. For those who need help with their returns, where can they find support? How can TaxTim help them?

“Resources are available online via a variety of information sites or the SARS call centre.

TaxTim combines the expertise of a tax practitioner with the ease of online filing. We offer taxpayers simple step-by-step guidance by asking easy-to-understand questions, we then complete and submit the return to SARS on their behalf. TaxTim strives to have all possible refund opportunities maximised and aims to ensure that taxpayers don’t experience any SARS compliance issues.” 

While the due date for tax returns is still a couple of months away, it will be in your best interest to start filing sooner rather than later in order to prevent deadline stress from beating you down. If you don't have the time to file everything at once, consider starting early and completing it bit by bit. Then you don't have to sort through an avalanche of papers in one sitting.

DISCLAIMER

The views expressed in this article are that of the individuals quoted and do not necessarily reflect the opinion of Hippo.co.za and its affiliates. Hippo.co.za has made this article available as an information source and cannot be held liable for any losses or damages that occur as a result of this article. Readers are encouraged to consult a professional financial advisor with any tax related issues.