I am getting requests of people asking me:
- Should I file a tax return
- Do I qualify for a refund
- Why is my refund reduced or
- Why am I being asked to pay more than what I paid in the last submission
Let us now address each of these issues:
Should I file a tax return:
Not everyone is required to submit a tax return, especially if your income earned from employment is less than R350 000 and you do not have any other deductible claims. If you have filed in the previous tax years, there is an expectation that you will again file this tax season. if you still not sure if you need to file a tax return, I propose two alternatives:
- Speak to us or your tax practitioner for specialised tax advise. Most will not charge you for just the consultation
- Use the SARS questionnaire to guide you on whether you need to submit or not.
You do not need to submit if you meet all of the following criteria:
- Your total employment income / salary for the year (March 2017 to February 2018) before tax (gross income) was not more than R350 000
- You only received employment income / salary for the full year of assessment (March 2017 to February 2018) from one employer
- You have no other form of income (e.g. car allowance, business income, taxable interest or rental income or income from another job)
- You do not want to claim for any additional allowable tax related deductions (e.g. medical expenses, retirement annuity contributions, travel expenses, etc.).
Do I qualify for a refund:
A refund arises because the tax you paid in the tax year is more than what you should have paid for that tax year. This happens for several reasons, for example, you are a provisional taxpayer and you happen to overestimate your tax payable. It could be that you contribute to a retirement annuity fund and your employer has not taken this into account when computing your monthly PAYE. It could be that you have kept a log book through out the year and you then claim the business portion of your travel. If you do not have any deductible claims, chances are that you will not get a refund from the 2018 tax year.
We have put together a few consideration for you to get a refund in this article, which can be found here.
Why is my refund reduced or why am I paying more tax this tax year than the previous?
1. You have worked in more than one place in the tax year:
Sometime people work in more than one place in a year and their salaries change from the first employer to the next, with a result that this pushes them into a higher tax bracket or simply pushes their taxable income up. There is a believe in some taxpayers that if I they taxed in those two places, then they do not have to pay more tax that they have already paid. However, one need to remember that when they worked at each of those places, the payroll systems from those places only “saw” what they were paid there. But, SARS will look at the combined income from the two employers and often this may mean more tax is due, especially if the taxpayer received a salary increase when they changed employers. This is often missed by some taxpayers and sometimes SARS officials fail to explain this to taxpayers.
2. Failure to update payroll system:
I have had some business owners who run their own payroll systems failing to update their payroll systems during the tax year to reflect any changes to their financial plans in the year. For example, one may decide to cancel their medical aid or move their medical aid to their spouses but forget to tell their payroll systems that they no longer contribute to medical aid. The result is then that their payroll system continues to give them medical aid tax credits which they should no longer receive. At the end of the year, they are likely to be asked to pay more. The same could happen if they decide to take cancel/reduce a retirement annuity contribution.
3. Travel allowances
If you travelled less business kilometres in the year than you did in the previous year, your travel deduction will be less and therefore your refund due to your travel allowance will be smaller. Of course, you should have kept your log book in order to benefit from this.