With the tax-filing season opening on 1 July, the South African Institute of Professional Accountants (SAIPA) is advising taxpayers to get their filing done as soon as possible, and to approach the process methodically.
“Taxes have to be paid—it’s effort well spent to get the submission right and on time,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA. “By following these tips, taxpayers can streamline their efforts and avoid unnecessary stress.”
Confirm accuracy of documentation
Most income is now recorded on tax certificates issued by employers, banks or investment houses. Salary payments, deductions and benefits are found on the IRP5 issued by the employer, while other income earned (such as interest and dividends) is reflected on various ITC3 certificates. The only difference is that no employees’ tax deductions are made for income reflected in an ITC3.
Retief says that it is important to go through each certificate carefully to ensure it is correct—and that all income is disclosed. A common mistake, for example, is not to recognise the small interest income that might be earned on a medical aid savings account.
“The amount of such interest might be too small to be material, but the point is that SARS gets the information reflected on these certificates and its system will compare the income you have disclosed and what it expects. Even a small discrepancy could cause the system to flag a mismatch,” he says.
Further, it is important to ensure that your sensitive information, such as contact and banking details, are correct. Make sure they are current—especially if you are expecting a refund!
Use the previous year’s return as a guide, as this comparison will alert you to changes and even omissions. Also important is to be sure that there is continuity across years of assessment. “For example, if your final odometer reading for 2015 was 33 000, then the opening odometer reading for that vehicle for 2016 should be 33 000,” Retief notes.
Consider whether you had any additional sources of income or capital gain over the past tax year. These might include rental income, the sale of property or the sale of shares in a business, being mindful of when the income has accrued to you and not only when received.
Allocation of expenses
Apportion expenses accurately. If any expense has a dual purpose, only that portion used for business can be claimed. Thus, a self-employed person cannot simply claim all phone costs as a business expense—only the proportion used for business can be claimed. The same is true of mortgage repayments on a rental property: the capital repayment portion is not a claimable expense, while the interest and fees may be.
Keep your vehicle logbook up to date. Essential if you receive a travel allowance or a the use of a company car, a logbook must be kept, containing the necessary information regarding the business travelling, which includes at least: date, destination, reason for travel and kilometres travelled (including start and finish odometer readings).
Keep paperwork – ask for help
Retief urges that the paperwork for your tax return should be kept together in case SARS calls for any of it. Scanning and storing it as a matter of routine is highly recommended, as it needs to be retained for a minimum of five years.
Consult an expert if your matter is complex or you have a dispute. Don’t just submit a return if you are uncertain about something or file an objection if you have a dispute without the required grounds or knowing the procedural rules, Retief advises.
Keep in mind when submitting via e-filing, that the SARS system will not accept files larger than 2MB, but you can file multi files. The file that you upload on SARS e-filing cannot have restrictions, such as requiring a password to open the file. It’s also important to be sure that all documents are uploaded before submitting as the system does not permit forgotten files to be loaded later.
Tax filing closes for postal submissions on 23 September and 25 September for manual submissions delivered to a SARS office, for e-filing on 25 November 2016 and for provisional tax on 31 January 2017. Don’t delay your filing till the last minute.