How to get a SARS refund quickly; Essential Preparation Guide for Faster Tax Refunds
How to get a SARS refund quickly? We are reaching out early to ensure you’re fully prepared for the upcoming tax season. Once it opens, you’ll be ready to submit your tax return and potentially receive your refund sooner. Why wait? What do you need to get ready? You will need: Necessary documentation for submission. To address any administrative issues. Information on auto-assessments. Knowledge of basic deductions you can utilize. Documentation: The responsibility for proving entries on a tax return lies with the taxpayer. It’s crucial to compile documents throughout the year as you receive them. If you haven’t started, now’s the time to gather: IRP5s issued by your employer. If not received, request them politely. Medical aid and retirement annuity tax certificates are typically available via provider apps. Profit and loss statements if you run a business or are a sole proprietor. Details of rental income and expenses. Invoices supporting business and rental expenses. Home office expense details and corresponding invoices. Investment certificates for interest, dividends, and capital gains. Section 18A certificates for any donations made. Travel logbook for business travel claims. Details of non-personal use assets sold during the tax year. Any additional documents supporting your tax return. Admin Issues: Ensure your eFiling login details are handy and functional. Verify and update your bank details with SARS to avoid delays in receiving refunds. Auto-Assessments: SARS may issue an auto-assessment using data from third parties like medical aids or retirement funds. If you agree with the assessment, no action is needed. If you disagree, you have 40 working days to file a correction. If you miss the deadline, you can request an extension within 21 additional working days. Basic Deductions You Can Claim: Understand the deductions available to legally reduce your tax liability, such as: Medical aid tax credits. Retirement annuity contributions. Donations. Home office expenses. Tax-free savings. Foreign income exemption. Interest exemption. Travel expenses. Wear and tear. Business expenses. Capital gains exclusion. Frequently Asked Questions: How to get a SARS refund quickly? To get a SARS refund quickly, ensure you submit a complete and accurate tax return as soon as the tax season opens. Gather all necessary documentation beforehand, resolve any administrative issues, and verify that your bank details are up to date with SARS. Not having the correct and updated bank details may unnecessarily delay your refund. How quickly does SARS pay a refund? SARS typically processes refunds within 21 business days after a tax return has been submitted and assessed. However, this can vary depending on the accuracy of your submission and if any additional reviews are needed. Can you get your refund instantly? In some instances, SARS refunds within a few days, even a few hours especially where all is in order and there are no audits or verifications needed. While you cannot get your SARS refund instantly, ensuring that your tax return is accurate, complete, and submitted early can help expedite the process. Make sure all your documentation is in order to avoid delays. How to get a SARS refund quickly? You can speed up your SARS refund by promptly submitting a complete and accurate tax return with all required documentation. Regularly check your SARS eFiling profile for any updates or additional requests for information and respond quickly to any additional requests from SARS. What’s the fastest I can get my tax refund? The fastest way to get your tax refund from SARS is to file your return as early as possible, ensure all details are correct, and have all supporting documents ready. Typically, refunds are processed within 21 business days, but early and accurate submissions can help avoid delays. We encourage you to submit your tax return as soon as the tax season opens and to do so accurately and completely. Additionally, do not delay sending supporting documents to SARS as may be required. Why was my tax refund reversed by SARS? I do not understand why the refund that was due to me disappeared from my Sars statement. The refund was reversed for the following most likely reasons: – There is a special stopper on your account; – You have two valid bank accounts reflecting on your registered details and/or – You do not have valid bank details registered with SARS – Also, check if they issued a “verification completed with changes letter” How we may help: We are eager to assist you with your tax affairs, including tax return submission, interpreting assessments, and objections to issued assessments. Feel free to reach out for any help or information. Leave a message/get a quote Subscribe now:
What should you know about Auto Assessment?
What should you know about Auto Assessment? What is an auto-assessment? An auto-assessment is an automatic assessment issued on taxpayers by SARS. This basically means that SARS has collected taxpayer information from their parties (such as medical aid or retirement annuities) and then use this information to file your return and issue an assessment on this return automatically without your involvement. How will you know if you are auto-assessed? You should receive an email or SMS from SARS informing you that you have been selected for auto-assessment. The process started in July 2022. But, this is not the first time SARS has issued an auto-assessment. They also issued these in the 2021 tax year. What should I do if I receive an auto-assessment? SARS says if you agree with the aut0-assessment, you do not have to do anything. However, should you be in disagreement, you have just 40 working days from the date of assessment to file a correction (edited tax return.) What happens if you miss the 40 days? If you do not do anything, SARS assumes you are in agreement with the auto-assessment. The assessment becomes your final assessment at the expiration of the 40 business days. Can I request an extension? If you feel the 40 working days are too little, you can request an extension on eFiling before the 40 days have expired. SARS will require “reasonable” grounds for the request. if you miss the deadline, you will have an additional 21 working days to submit a request for an extension on the same terms. If both 21 and 40 days have passed and you still were not able to submit a correction, you will need to provide “exceptional circumstances” to justify a delayed request for extension. NOW TO THE BIG QUESTION, SHOULD I ACCEPT THE AUTO-ASSESSMENT? We think this is a risky move if (and SARS may not pick up these things on an auto-assessment:) 1. You have qualifying donations you would like to claim 2. You have qualifying out-of-pocket medical aid expenses 3. Your medical aid is being paid for by someone who is not the principal member (normally the person paying for the medical aid would be the one to claim the medical tax credits.) 4. You have capital gains on assets that you sold that fall outside the scope of an auto assessment 5. You are a crypto or share trader 6. You have a side business or rental income (profit or loss) 7. You have and qualify for a home office expense claim (deductions) 8. You would like to claim your business travel kilometres 9. SARS missed one or some of your retirement annuity funds Contact us: Was this helpful? Would you like us to do your tax return? Get in touch with us: Leave a message/ get a quote Subscribe now:
What are the tax implications of trading or buying shares?
What are the tax implications of trading or buying shares? The tax implication for having shares boil down to two things, whether your gain is income in nature or capital (gain) in nature. Let’s start by defining these two things: Income: Shares held as trading stock are bought mainly for resale at a profit. In other words, any shares held for speculative purposes normally fall under this category. The profits or any gain or loss made on the disposal of such shares (held for-profit/speculative) purposes will be of a revenue nature and will not be subject to capital gains. Gains of a revenue nature are subject to tax at marginal tax rates that vary between 18% and 45% depending on the circumstances of the taxpayer after taking into account all his/her other income (such as salary, rent, business income e.t.c.) The taxpayer can also deduct expenses directly related to the trading of these shares such as broker fees, transaction fees, subscription to broker news, tools and platforms and any such costs directly related to the trading of these shares. Capital: On the other end of the spectrum, for shares held as a capital asset (that is as a long-term dividend producing investment,) any gains or losses arising from such shares (held for investment/dividend earning) upon disposal will be of a capital nature. Gains that are of a capital nature are subject to capital gains and at a lower tax rate than gains of a revenue nature. Firstly, you get an exclusion of R40 000 as an individual on your gains. This means that you start paying capital gains tax if your gains exceed R40 000 for a tax year (year of assessment.) This is known as the annual exclusion. For natural persons dying during or after the 2020 tax year of assessment, the exclusion is R300 000. In addition to the annual exclusion, 40% of the gains are included in taxable income and then taxed as the normal marginal tax rates that apply to your salaries or other income. This 40% is known as the inclusion rate. Assuming that your marginal tax rate is 45% (the highest tax bracket,) the maximum you pay on capital gains is 18% (0.4 x 0.45 = 0.18.) Yes, you guessed it right, there can be 0% tax on your capital gains when: The sum of capital gain and losses does not exceed the annual exclusion; The sum of capital gain is less than or equal to the sum of capital losses (which means your gains set off against your gains); or Taxable income falls below the level at which normal tax becomes payable, that is if your combined income plus gains fall under the tax-free threshold. The effective rate (of 18%) we spoke about earlier applies if you fall in the highest tax bracket as an individual taxpayer. The rate is different from that which applies to companies or trusts. Companies and trusts, other than special trusts, pay a higher CGT than natural persons. They do not qualify for the annual exclusion and must include the capital gain at 80% of the gain into their taxable income. These are the effective tax rates: Companies are at an effective rate of 22.4% which is derived from the 80% inclusion rate and the 28% normal taxes for companies (0.28 x 0.8.) A trust that is not a special trust si at 36% effective tax rate for capital gains (0.45 x 0.8) What we have done above is the simplest way to look at share-holding. Are things that simple? Not always. The line between gains/losses of a revenue nature or gains of a capital nature can be a bit blurry. Capital vs revenue: When computing your tax liability, the first step is to determine if your gains are capital or revenue in nature. Apart from the three-year rule according to Section 9C (that basically says you must own a share for at least 3 years for your gains to be treated as capital in nature,) the Tax Act itself does not provide objective rules to distinguish between gains of revenue and capital nature. This task has always been left to the courts, which over the years have established some rules for this distinction. So, the onus is on you as the taxpayer to prove that your gains are of a capital or revenue nature. The most important factor in establishing the nature of your gains is the intention. This is not always an easy task since you can have more than one intention at a time and since intention can change over time. But, the courts have established that the taxpayer evidence as to intention must be tested against the surrounding circumstances of the case. These may include, the frequency of transactions, method of funding and reasons for selling. These may help establish your intention when you bought or sold the shares (Elandsheuwel Farming (Edms) Bpk v SBI.) “If they (the shares) were bought as a long-term investment to produce dividend income, the profit is likely to be of a capital nature. But if the shares were bought for resale at a profit, the profit will be of a revenue nature.” In SIR v The Trust Bank of Africa Ltd it was established that for a profit to be of a capital nature, “the slightest contemplation of a profitable resale need not be excluded. Where there were mixed intentions, the dominating intention is the one that establishes intention (COT v Levy.) Some general guidelines/Principles (source, the SARS guide on tax implications on shares:) Any profit or loss on disposal of shares will be of a revenue nature if they were purchased for resale as part of a scheme of profit-making (Californian Copper Syndicate (Limited and Reduced) v Harris (Surveyor of Taxes) A profit on the sale of shares is more likely to be of a revenue nature if it was not fortuitous, but designedly sought for and worked for (CIR v Pick ’n Pay Employee Share Purchase
How to guard yourself against being sued by SARS
Since April 2018, SARS has been cracking down on non-complying taxpayers in filing their tax return. Since April, SARS has successfully prosecuted and convicted 10 taxpayers for failing to submit their outstanding tax return. Among these people is prominent soccer player, Teko Modise. Most of you would have also read about the socialite Bonang being dragged to court by SARS over non-compliance. In terms of the Tax Administration Act, the following are viewed as criminal offences: Avoiding paying taxes Not submitting tax returns Failure to submit information to SARS Submitting false information to SARS Giving an incorrect answer to SARS, whether in writing or orally Failing or neglecting to register or failure to notify SARS of changes in registered particulars Issuing an erroneous, incomplete or false document required under a tax Act Here are a few tips to guard against being sued by SARS: Appoint a tax practitioner: Tax laws and requirements are constantly changing. Each year new laws are introduced. It is hard to keep up to date with these changes if you are non-tax experts. It is advisable to appoint tax practitioners to always advise you on tax-related matters and to submit the tax return for you in terms of the relevant laws. This will save you the costs of objections and “fighting” with SARS. Always check your tax compliance status and inbox: One should regularly check their tax compliance status, which is a platform that gives an indication of whether one’s tax affairs are in order. Your tax compliance profile should be green in all aspects as per the above image. The minute any of those tabs turn red, something has gone wrong with your tax affairs. You should immediately investigate and address these issues. SARS will also often send you a notification when your tax compliance status changes. When you receive this, immediately investigate and resolve it. If you hired a tax practitioner, you must also immediately notify them so that they can investigate and help you to resolve these identified issues. Do not miss a return submission: You must always submit all your tax return where you are required to do so. Missing a tax return is a criminal offence and may land you in trouble. There are few instances where one may not be required to submit a tax return. If in doubt about whether or not you need to submit one, consult with your tax practitioner/professional. Generally, only people who meet the four below criteria do not have to submit an income tax: – Your total employment income/salary for the year is not more than R350 000 – You only received employment income/salary for the full year of assessment from one employer. – You have no car allowance/company car/ travel allowance or other income (e.g. interest or rental income). – You are not claiming tax related deductions/rebates (e.g. medical expenses, retirement annuity contributions other than pension contributions made by your employer, travel). Keep and submit supporting documents: One must always ensure that for everything on their tax return, there is a valid supporting document. Constantly check your inbox to ensure that you respond to request for supporting documents by SARS. SARS is becoming quite strict with these. So, ensure that you have proper and valid supporting documents for your tax return. Be truthful and honest: Remember, there is a difference between tax avoidance and tax optimisation. Tax avoidance is a criminal offence in terms of the Tax Administration Act and can land you in big trouble. When submitting your tax return, ensure that you have honestly done so. Declare all income that accrued to you in that tax year (salaries, rental income, commission and other incomes). In terms of expenses, you must take care not to include personal or expenses of a capital nature. As an example, personal groceries or drawings will not be allowed as deductions and should not form part of your deductions. Similarly, if you are in the business or renting cars or accommodation, the capital repayments on the car or property cannot be deducted as business expenses. If you have a home office, you may not claim your entire house’s rental expense. For home office expenses, one would need to work out the total square meterage of the home office in relation to the total square meterage of the house, and then convert this to a percentage. One then applies this percentage to the home office expenditure in order to calculate the portion, which is deductible. Conclusion: It is a criminal offence not to submit a tax return. Late submission of a tax return also has huge consequences. Submitting late can attract penalties, interests and administrative penalties, which can range from R250 to R16 000 per month. If you have a couple of outstanding returns, this is when SARS can get the NPA involved leading to an individual’s case being heard before the court. Do you or your business need help to comply with tax laws or SARS? Leave a message Subscribe now:
What you need to know if you are earning foreign income
What you need to know if you are earning foreign income: Key takeaway points: 1. Before 1 March 2020, all foreign income (as defined) was exempt 2. After 1 March 2020, the exemption is limited to R1.25 million 3. Certain conditions have to be met before the exemption can be applied 4. Independent contractors and individuals who are self-employed are excluded from this exemption. 5. Tax residency is NOT based on Citizenship. 6. You must notify SARS as soon as you cease to be a tax resident. 7. SARS will require certain supporting documents to verify your foreign income and residency status What is foreign income exemption? “Section 10(1)(o)(ii) provides for an exemption for foreign employment income received for services rendered outside South Africa, provided the requirements are met.” Before 1 March 2020, if all conditions were met, the entire income was exempt. The conditions include: 1. Be a tax resident of South Africa 2. Earn certain types of income (such as salary, taxable benefits, leave pay, Wage, overtime pay, bonus, gratuity, Commission, Fee, emolument, allowances including travel and advances, amounts received in respect of share vesting…) 3. In respect of services rendered by way of employment 4. Outside South Africa 5. During specified qualifying periods (see paragraphs that follow) 6. Have a formal employment contract (with a resident or non-resident employer) Since 1 March 2020, the exemption is limited to R1.25 million if the conditions are met. Any remuneration received in excess of R1.25 million will be subject to normal tax rules in South Africa. Before 1 March 2020, the income would have been exempt if all conditions were met. You must file your tax return even when you qualify for this exemption and the qualifying income must be declared under the relevant SARS codes. Who is a tax resident? Citizenship does not define tax residency. A tax resident is a person who is ordinarily resident or becomes a resident by way of a physical presence test, which requires one to be in SA for a certain period of time to be considered a tax resident. If you do not want to be a tax resident, your option is to financially emigrate However, emigration alone does not remove the residency status as the physical presence test may still be applied to determine your tax residency status. You must notify SARS as soon as you cease to be a tax resident. The physical presence test: This is a calculation of the actual amount of time you physically spend in SA. You are considered a SA tax resident if you meet all of the criteria below: 1. 91 days in South Africa in the current year of assessment, and 2. 91 days or more in each of the preceding five years of assessment, and 3. 915 days in total during those five preceding years of assessment. You fail the physical presence test if you fail to meet any one of the above criteria. What are the qualifying periods? An employee must be outside South Africa for certain periods to qualify for the exemption: 1. A period not exceeding 183 full days (in total) during 2. Any 12 month period (not a calendar year or a tax season) and 3. A continuous period exceeding full and unbroken 60 days during that 12 month period Who does not qualify for this exemption? 1.Independent contractors 2. People who are self-employed 3. A public office holder appointed or deemed to be appointed under an Act of Parliament 4. Employees who are employed in the national, provincial or local sphere of government, certain constitutional institutions, national and provincial public entities and municipal entities. Supporting documents required by SARS: 1. Spreadsheet showing the number of days in and out of SA 2. A copy of your passport showing days in and out of SA 3. Letter from your employer stating you’re allowed to work overseas (and for what periods), plus what amount was earned during that period 4. Foreign/ex-pat assignment employment contract 5. IRP5 showing foreign employment income earned (e.g source code 3651, 3653, 3655, etc. We hope this was helpful. If you have any questions: Leave a message Subscribe now: