With the new tax year kicking off on 1 March 2018, we’ve created a list of important things to keep in mind when planning your tax returns.
Watch the budget speech
The first item on your to-do list should be ticked off before the tax year even starts. Tune in to the annual national budget speech on 21 February, or find out what it proposes for taxpayers going forward. This is a vital part of tax planning. Why? During the speech, changes to tax rates and proposed changes to current tax regimes are announced. Watch the capital gains tax inclusion rate this year!
The proposed cancellation of the tax exemption of expat employees in the 2017 budget proved exactly how the annual budget could affect career planning opportunities.
File your outstanding tax returns
Many taxpayers are woefully behind on their tax compliance obligations. Although you can only be penalised for having two or more annual income tax returns outstanding at a time*, not having a compliant tax history may come back to haunt you later. This could mean more than the mere levying of penalties. You could be unable to obtain a tax clearance certificate when needed or may be prejudiced when engaged in a tax dispute with SARS.
Remember to file provisional tax returns on time
Provisional tax should be filed by 31 August and 28 February. More importantly, remember to pay your declared provisional taxes when it’s due to avoid paying a 10% late payment penalty. (The same applies to the filing of other tax returns, such as VAT or dividends tax.) Third or “top up” provisional tax payments may also be made by 30 September every year to avoid interest on underpaid provisional taxes.
Request a SARS statement of account
You can either do this via eFiling or ask your tax practitioner. It’s good practice to ensure that no surprises, such as forgotten taxes, interest or penalties, are left unpaid on your SARS account. Do this at least once a year.
Find the due dates
Around June of every year, due dates for the filing of annual income tax returns are published. Typically, tax season opens on 1 July and closes mid-November for non-provisional taxpayers. Tax season closes on 31 January the following year for provisional taxpayers.
Keep an eye out for amendments
Amendments to tax laws are published in June/July every year. Although this typically involves a complex legislative document, the proposed amendments are widely published in the media. Keep an eye on the financial press for further details.
See a tax professional at least once a year
Your taxes could be the biggest expense on your annual budget, so take advice on how to legitimately plan your affairs to ensure that your tax cost is not more than it needs to be. Even if you only earn a salary and have limited tax deduction available, find out about the potential benefits of investing into a venture capital company, contributing to a retirement type fund or saving with a tax-free savings account. All of these may reduce your ultimate income tax bill in the 2019 tax year.
Take an interest in your tax affairs: know what your obligations are – whether it’s compliance or the amount of taxes you’re in for. Take steps to manage the compliance requirements and try to have your tax exposure minimised with legitimate actions.
*Companies and trusts cannot be penalised for such transgressions, though other remedies are available to SARS here.
About the author:
Albertus Marais is the director of AJM Tax.
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!