Filing season is upon us! COVID-19 has placed pressure on the state coffers. SARS will be coming out of the gates guns blazing in an attempt to recover as much lost revenue as possible.
This doesn’t mean SARS will unjustifiably increase your tax liability. However, SARS will leave no stone unturned in the pursuit of tax revenue, having already indicated they expect a revenue shortfall of about R285bn.
This is not something to be frightened by. It’s merely a caution to ensure that you have all the evidentiary documents you need to prove to SARS that your tax liability is properly accounted for.
The time periods of tax season
Phase 1 of tax season will commence on 1 June 2020. During this phase, taxpayers must confirm their personal details. They must obtain IRP5/IT3(a) certificates and any other documentary proof that would be needed to verify their income and expenses. Certain taxpayers will also receive auto assessments during Phase 1, but the details of this are not yet available.
During Phase 2, individual taxpayers who are required to file and have received an auto assessment will have the opportunity to confirm their acceptance of these assessments. Individuals registered for eFiling will also be allowed to file early during Phase 2, but only if their employers and all other 3rd party data providers are fully compliant.
Non-provisional taxpayers who have not accepted the auto-assessment and taxpayers who did not file during Phase 2 can file their returns during Phase 3 at a SARS branch. This commences from 1 September 2020. During this phase, SARS will also remind taxpayers who are required to file tax returns and who have not yet done so.
What documents do I need?
Employees who receive a monthly salary should consider gathering the following documents (where applicable) to help state your case to SARS:
- IRP5 Employees Tax Certificate.
- SARS logbook, where you receive a travel/car allowance.
- Medical tax certificate and also evidence of all other medical expenses incurred.
- Retirement Annuity contribution certificate.
- Tax certificates indicating interest income and dividend income received.
- All information (income and expense) relating to any side hustle.
- If you are married in community of property, the certificates received by both you and your spouse are required.
If more than 50% of your salary constitutes commission income or you don’t earn a normal salary, you will be able to claim tax deductions for any expenses incurred (that are not capital in nature) in the production of your income. General evidence required by SARS would be in the form tax invoices and proof of payment as relates to those invoices.
Furthermore, no matter what your income stream, it is a requirement that all evidentiary documents be kept for five years from the date of submission of your return.
A happy ending to filing season
SARS’s filling season does not need to be unbearable. By ensuring you are prepared for filing season, you can mitigate against any potential headache. Make sure that this season your tax filing goes smoothly.
Tax Tuesday blog
Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts share their tips and explanations on tax issues. Learn everything you need to know about tax, from deductions you never knew about to retirement savings and capital gains. The first Tuesday of every month is Tax Tuesday. Don’t miss it! This week’s post was written by Bobby Wessels.