Income tax is the money paid to the government through SARS from the personal wages of working individuals. This money is used to help fund community projects such as government hospitals and roads. Once you are registered with the South African Revenue Services (SARS) as a taxpayer, the amount of tax you pay depends on:
- how much you earn
- your age (whether you’re under 65 or over 65)
- if you’re a member of a pension fund or pay towards a retirement annuity fund
SARS is a well-run department, penalties for not submitting your tax return are high, and tax can be a confusing and sometimes stressful undertaking. However, there are some simple points that can help prepare you for tax season. Read the following questions and have a look at the document checklist below to put your mind at ease that you are ready for tax time:
- Do you know when the 2016 tax season starts and ends? The 2016 tax season started in July 2016 and runs to November – the year being assessed is March 2015 to February 2016. For provisional tax payers, the tax year runs until January 2017.
- Do you know what a ITR12 form is and how to complete it? This is your official tax return document and it needs to be submitted accurately and in full so that SARS can calculate your tax for the year being assessed. If you have paid too much tax, you will receive a refund. If you have paid too little tax, SARS will require you to submit the outstanding amount.
- Do you understand PAYE? PAYE is tax paid by employees. If you are employed, this amount is deducted from your salary by your employer and paid over to SARS on a monthly basis. It is designed to make sure that your income tax liability (the amount of tax you owe) is settled on an ongoing basis. This helps you to settle your full tax bill over the year. You can work out your PAYE amount using the tax tables issued by SARS.
- Do you know the deadlines for submitting your tax return form? For 2016, these are as follows:
- 25 November 2016 – at your nearest SARS office(for non-provisional tax payers)
- 31 January 2017 – provisional taxpayers via eFiling
To accurately submit your tax return, you will need the following supporting documents:
- IRP5/IT3(a) certificate(s) from your employer or pension fund. Once a year, your employer will give you an IRP5 tax certificate that shows the total amount that you earned and the total tax that was deducted. Employees who have not had tax deducted will receive an IT3(a) certificate.
- IT3(b) certificates for investment returns.
- Any applicable financial statements
- Medical aid contribution certificates and receipts.
- Retirement annuity fund certificates.
- Certificates you received for local interest income earned.
- Vehicle logbook and other documents in support of business travel expenses.
- Completed confirmation of diagnosis of disability form(ITR-DD) (if applicable).
- Any other relevant income and deduction information.
- Your current bank account details.
You can find more information about these forms here.
This blog post applies to individual tax returns. If you run a business, no matters its size, slightly different tax law apply and your business will have to be registered with SARS, over and above you being registered as an individual taxpayer. You will need to pay over tax for yourself and your employees (by deducting tax from them) as well as paying VAT if your business has an annual turnover in excess of R1 million.
For help with individual and business tax, you should consider hiring a professional accounting and tax consultant firm like PATC (Professional Accountants & Tax Consultants). We can take care of all your tax needs, ensuring that you do not incur any unnecessary penalties and remain tax compliant at all times.