Should I Submit a Tax Return in 2024? Essential Tips for All South Africans
Should I Submit a Tax Return in 2024? In this article, we look at whether you should submit a tax return. At the end of the article, we will post a form that can assist you in deciding whether you need to submit a tax return. Not everyone should submit a tax return. Here are some guidelines: Who should not submit a tax return: A natural person or a deceased estate is not required to submit a return if their gross income consists solely of one or more of the following: Remuneration (other than retirement lumpsum) not exceeding R500 000 and this is from a single source and where PAYE has already been deducted Interest income from a South African Source (not including Interest from Tax-Free Investment vehicles) and this interest does not exceed: R23 800 for a person younger than 65 years 34 500 for a person who is 65 years or older or 23 800 for a deceased estate Tax-exempt dividends where the individual was a non-resident throughout the year of assessment; Amounts received or accrued from tax-free investments; and A lump sum received from a retirement fund with tax deducted according to a tax directive. Non-residents are required to submit a tax return if: The non-resident carried on a trade (business) in South Africa The non-resident disposed of an asset in respect of which the Eith Schedule applies The non resident’s gross income included interest from a source in the Republic to which provisions of section 10(1)(h) of the income tax Act doe snot apply The above scenarios do not apply where: You are paid or granted certain allowances relating to business travel, accommodation or subsistence You are granted table benefits or advantages derived by reason of employment or the holding of any office You received or accrued any amount in respect of services rendered outside South Africa. Commonly asked questions: What do I need to know concerning the 2024 tax season We have created a guide for you here. Am I supposed to submit a tax return? You need to submit a tax return if you meet specific criteria such as earning above a certain threshold, having multiple sources of income, or wanting to claim tax refunds and rebates. Criteria include: Earning above the tax threshold. Having more than one employer or income source. Earning rental income, capital gains, or foreign income. Wanting to claim deductions for medical expenses, retirement annuities, or other tax credits? Do I need to file a tax return with SARS? If you meet the criteria above. Filing a tax return ensures that you comply with tax laws, potentially receive refunds, and accurately report all sources of income to SARS. Why is it important to submit tax returns? Submitting your tax returns is crucial for several reasons: Compliance with legal obligations. To claim refunds or rebates due to overpaid taxes. Avoiding penalties and interest charges for non-submission. Ensuring accurate records with SARS, which can be beneficial for future financial planning. Ensuring you have a complete record of filing tax returns and avoiding penalties for non-submission of tax returns What happens if you don’t submit a tax return in South Africa? Not submitting a tax return can lead to: Penalties for late submission or non-submission. Interest charges on unpaid taxes. Possible legal action by SARS. Missed opportunities for tax refunds or rebates. How much tax will I pay if I earn R6000? If you earn R6000 per month (R72,000 per year), you are below the tax threshold and typically will not pay income tax. For the 2023/2024 tax year, the tax threshold for individuals below age 65 is R95,750 per annum. What does IRP5 mean? An IRP5 is a tax certificate issued by employers to employees. It details the income earned and taxes deducted during the tax year, which is necessary for filing your tax return. Where do I get my IRP5? Your employer should provide your IRP5. It can also be accessed on your eFiling profile if your employer has uploaded it to SARS. But, it is important to request it from your employer as it forms part of supporting documents for your tax return. When can I submit my SARS tax return in 2024? The 2024 tax season opens on July 15, 2024. Auto assessment will start on 1 July 2024. How to reduce taxes in South Africa? You can reduce your taxes by claiming allowable deductions such as: Medical aid contributions and expenses. Retirement annuity contributions. Donations to registered charities. Home office expenses. Tax-free savings accounts. Ensuring all allowable business expenses are claimed if you are self-employed. Keeping detailed records and documentation to support your claims. You can read more about basic tax deductions here What if I am aggrieved by SARS? Review the Assessment: Carefully examine the assessment details and gather all supporting documentation. Request Reasons (Optional): Seek detailed reasons from SARS within 30 days of receiving the assessment to understand its basis, if unclear. File an Objection: Submit a formal objection, including necessary documents and legal arguments, within 80 business days of the assessment date or the date SARS issues the reasons. Appeal: If dissatisfied with the objection outcome, lodge an appeal within 30 business days of the notice. This may involve Alternative Dispute Resolution proceedings if elected. Still unsure if you need to submit a tax return? Click here to find out if you should file a tax return. How can we assist you? We can help you with: Filing a tax return and tax return preparation Interpretation SARS missed assessments Filing an objection Tax planning and advisory Bookkeeping and accounting Payroll services VAT registration VAT return preparation and submission Tax training and workshops Retirement and estate planning Leave a message/get a quote Subscribe now:
Can SARS see all my bank accounts? Crucial Tips for the Tax Season
Can SARS see all my bank accounts? Stay Out of Trouble with SARS, Know how SARS Bank Account Access It is important to be vigilant and honest on your tax return. SARS has access to your bank accounts through third parties such as banks. SARS may raise additional assessments if they detect undeclared income, which can also attract penalties and fines. Take the time to ensure that your tax return is accurate and complete and that you have documents and records to support your claims. Respond promptly to SARS with any required explanations and documents. Utilize the dispute mechanism if you do not agree with additional or estimated assessments. Request a compromise or repayment plan if you cannot immediately settle your account with SARS. The 2024 tax season opens on the 15th of July 2024. From 1 July, SARS will start issuing auto assessments for non-provisional taxpayers. Here are a few things you need to know: Criminal Offences: The following actions or inactions relating to non-compliance may constitute a criminal offence and may attract criminal charges, penalties, and interest: Failing to register or notify SARS of a change in registered details. Failing or neglecting to register as a tax practitioner. Failing or neglecting to submit a tax return or document to SARS. Failing or neglecting to retain documents/records required by SARS under the Tax Administration Act. Submitting or making a false statement. Issuing an erroneous, incomplete, or false document. Pretending to be a SARS official. Steps to Stay Compliant: To avoid getting into trouble with SARS and the law, take the following steps: Check and ensure that your details (such as addresses, personal details, etc.) are recent and up-to-date on eFiling. If you provide tax services, ensure that you are registered as a tax practitioner and are compliant with the requirements of SARS and your controlling body. If you are a taxpayer, ensure you are using the services of a registered tax practitioner. Submit your tax returns on time. Keep records and documents that support your tax return and always ensure that your tax return is a true reflection of your income and deductions for the tax year under review. Common Questions: Does SARS have access to all my bank accounts? Yes, SARS can access your bank account information through third-party data providers like banks. Do banks report deposits to SARS? Banks are required to report certain deposits to SARS, which helps them verify your declared income. How does SARS verify your bank account? SARS verifies bank accounts by cross-referencing data from your tax return with information provided by banks. Who can see my bank account? Besides you and your bank, SARS can access your bank account details for tax compliance purposes. SARS Knows What’s in Your Bank Account: Some people believe they can hide information from SARS. However, it is in your best interest to declare all income you received during the year of assessment, as it is highly likely that SARS knows more about your finances than your spouse or family members do. In some developed countries, a taxpayer’s tax return is linked to their bank account. This way, the taxpayer is obliged to account for everything that happens in their bank account on their tax return. SARS is developing a similar system. SARS now requires certain taxpayers to explain why the revenue declared on their tax return does not match the deposits in their bank accounts. Unsatisfactory answers have led to additional estimated assessments and, in some cases, heavy penalties being imposed. For example, if a taxpayer declares R1.5 million on their tax return but the deposits in their bank accounts suggest a revenue of R5 million, the taxpayer must explain to SARS why the revenue collector should not raise additional assessments for the “under-declared income.” If you do not respond or do not supply adequate reasons as to why the deposits were not declared, or that they relate to loans and inter-account transfers, or potentially from other non-taxable income, then SARS may raise these assessments. How Does SARS Know What’s on Your Bank Statements? When you submit your tax return, SARS may request you to submit your bank statements as part of the supporting documents. Additionally, SARS has had access to taxpayers’ information from third-party data providers such as banks and other financial institutions since 2012. What Happens if You Do Not Agree with SARS Assessments? The burden of proof lies with the taxpayer. SARS has dispute mechanisms that can be used to challenge these assessments. These procedures often take time and may require supporting documents to support your claims. But SARS may require the taxpayer to reconcile amounts line by line and to explain each line with evidence. For example, why a deposit stands out, why it was made, and why it was not included in the taxpayer’s income. What if SARS is Correct but I Cannot Pay Them? It is important to note that SARS can instruct the taxpayer’s bank to deduct monies from an account and pay it over to SARS. Therefore, it is important for a taxpayer to approach SARS and request a compromise or a repayment plan if they feel they are not in a position to settle the amounts due. Ensure Your Compliance: Stay proactive and ensure your tax affairs are in order. Contact us today for expert guidance and support to ensure you stay compliant and avoid unnecessary penalties and stress. Let us help you navigate SARS requirements with ease. 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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:
Can I deduct home office expenses?
Can I deduct home office expenses? These days the work culture has changed. Since lockdown was introduced. Some companies had to close shop and some employees were required to work from home. Also and in general, the world is changing and so is the way people work and interact. Many people, like myself, prefer working from home. Working from home has become a normal thing. The GIG economy will also make working from home just another normal thing. Luckily, SARS allows home office deductions if certain conditions are met. However, it is important to note that SARS often than not flag returns with home office expenses for audit. So it is important that one correctly and accurately claims these deductions. It is worth understanding the rules around home office expenses as they are allowed under certain circumstances. Not everyone may end up deducting home office expenses. Having said this, it is important to point out that the situation is different for self-employed people or what we would term sole proprietors or freelancers who work from home. These taxpayers can automatically deduct their home office expenses. These taxpayers (self-employed, sole proprietors, freelancers) do not need to work through the tight conditions required for one to be able to deduct home office expenses. They simply have to include their home office expenses with the local business, trade and professional income on their tax return. What is required to be able to deduct home office expenses? The employer must allow the taxpayer to work from home. So, you can’t just work from home because you want to. Your employer must give you express permission to work from home. The taxpayer must spend more than half of their total working hours working from their home office. The part of the home in respect of which a claim is submitted must be occupied for purposes of a “trade”, as defined in section 1. So, in essence, there should be a specific part of the home that is used exclusively for this purpose. As an example, a specific set aside office must be kept aside for the trade. A taxpayer meeting with a client in the bar area of their home may not qualify for these deductions. Building from the point above, the part that is so occupied must be specifically equipped for purposes of the trade. So, it is important that space/office must be specially fitted with the relevant instruments, tools and equipment required for the taxpayer to perform their work. The part must be regularly and exclusively used for purposes of the trade. As an example, taxpayers who earn a commission but who spend the majority of their time on the road visiting clients and performing their work at the client’s premises do not qualify for home office expense deduction. What expenses can be deducted? First, one needs to check the taxpayers’ remuneration structure to see if they are: A commission earner, that is, takes more than 50% of their total remuneration from the commission or some other variable form which is based on their performance. A normal salaried employee with variable payments/commission making up less than 50% of their total remuneration. The commission earners can deduct the following: Rent Interest on bond Repairs to premises Rates and taxes Cleaning Internet Wear and tear and All other expenses relating to their house as well as other commission related business expenses (such as telephone, stationery, repairs to printers, maid answering phone in your absence etc) The salaries employee with variable payments/commission making up less than 50% of their total remuneration can deduct: Rent of the premises Interest on the bond Cost of repairs to the premises and other expenses in connection with the premises Rates and taxes Cleaning Internet, Wear and tear and all other expenses relating to their house only. How to calculate the home office deduction: One would need to work out/measure the total square meterage of the office in relation to the total square meterage of the house. This is then converted into a percentage. The percentage is then used to apportion the expenses that can be used for home office deductions. Example: Mrs taxpayer is a software engineer who works for Corona Company Pty Ltd. Her remuneration consists of a salary only (no commission.) Her Company allows her to work from home three days per week. Mrs taxpayer has a separate office at home, fitted out with a computer and printer, which she uses exclusively for her software engineering job. Her office is 30 square meters, and the floor space of her entire home (including the office) is 300 square meters. During the tax year, she incurs the following expenses: – R120, 000 interest on a bond – R36, 000 rates and electricity – R36, 000 paid to the cleaner – R5, 000 roof repairs – R12, 000 cell phone expenses Based on the above information, Mrs taxpayer qualifies for home office deduction. Based on the space occupied by her home in relation to the entire house, the apportionment ratio is 10% (30/300). Therefore her home office deduction is 10% x (120 000 + 36 000 + 36 000 +5 000) = R19 700. Her cell phone costs will not be deductible since she is not a commission earner. Will I qualify for a home office deduction for the 2021 tax season? The 2021 tax season started 1 March 2020 and ends 28 Feb 2021. To be able to claim home office expenses you would need to have met the conditions specified earlier. You will also need to have ended up working from home for more than six months of the tax year. That is, you would have worked from home until at least the end of September 2020. Need help claiming your home office expenses or finding someone who can deal with SARS on your behalf? Leave a message Subscribe now: