This week our friend Stealthy Wealth shares his approach to tax returns.

With Tax season opening on 1 July, I thought I would share my policy on the timing of submitting my tax return.

I either submit my tax return at the very beginning of the tax season or at the very end. I base this decision on whether I am going to be owing SARS money, or if they are going to be giving me a refund.

If I am going to be owing SARS money (as has been the case for the last few years – due to my rental property, REIT dividends, etc.), I wait for the very end of the tax season before submitting. I leave the money I am going to be paying over SARS in my bond, and I enjoy the returns in the form of interest savings. Only once SARS has received my return and issued a statement saying how much I owe do I take the money out of the bond to pay them.

If SARS are going to be giving me a refund (sadly this hasn’t happened in a while, but could be from medical aid tax credits, or RA, or whatever), I submit my tax return as early as possible so I can receive the refund as early as possible. I enjoy a few extra months of returns from either paying it into my home loan, investing it or whatever.

Of course you are not going to be making millions from this strategy, but the few months benefit each year over a number of years can end up being worth quite a lot.

Why we love it

Cost cutting can become a consuming hobby. Once you’ve taken a hard look at your big expenses as Stealthy advocates here, you can start saving on the margins. Saving R50 a month in one spending category won’t make you rich, but if you manage to save R50 in five different categories, you’re putting R3,000 back in your pocket every year.

By keeping his money in his bond, Stealthy is staying on the right side of interest. Even in a savings account with a generous interest rate like the Capitec Global One account, you’re typically getting less than 5% interest a year. Bonds are a different beast. Paying less interest on a small amount of money can have a significant impact in the long run.

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