Tips for filing tax returns for beginners and seasoned taxpayers

filing tax returns

Filing a tax return is not something we all learnt at school and can be overwhelming not only for first-timers, but for seasoned tax payers too.

Uncertainty can rear its head with the slightest change in circumstances.

Money, the earning of it and the sharing of a large portion with the taxman, is part of our responsibility as progressive citizens, but a few smart moves can make the burden of parting with your hard-earned money a little less complex.

2020 has seen a change in the tax-filing process, as SARS continues on its quest to streamline and digitise the procedure. The deadlines that we were used to have been spanned out through a new four-phased process as follows:

Phase 1 (deadline 31 May 2020) – employers and other third party data providers such as medical schemes, retirement annuity funds and banks submit information direct to SARS.

Phase 2  – SARS validates third-party data – SARS will be following up on employers and others who failed in their duty to file their data to SARS on time.

Phase 3 –  the ‘auto-assessment’ process will commence on 1 August  2020, where a significant number of taxpayers will receive draft assessments from SARS, which they then need to confirm and submit. SARS will rely on all the third party data that was successfully submitted and confirmed.  This is most relevant to taxpayers who typically just receive one source of income (salary) and have a medical aid and/or retirement annuity; and they may receive interest on their bank accounts, etc.

Phase 4 – The fourth phase opens on 1 September where remaining taxpayers, with more intricate tax returns, and those that have not accepted or received an auto-assessment, can submit.

The assessment year in which this applies to runs from 1 March 2019 to 29 February 2020.

Going it alone or bring in the experts?

Everyone’s tax return is different, so for those submitting a fairly straightforward return, filing is relatively uncomplicated.

Danielle Luwes, tax practitioner at Hobbs Sinclair accounting firm, points out that “there might be certain claims or allowances that you are unsure of and where a tax specialist can be most helpful. Often, the fee paid to a tax practitioner is well worth it in submitting an efficient tax claim.”

A Tax Practitioner will ensure that you make use of all the allowable deductions as set out in the Income Tax Act.

Tax tips for first-timers

Luwes also points out a few tips for first-time tax payers who are preparing for tax season:

  1. Check if you need to file a tax return. You do not need to submit a return if ALL of these apply to you:
    • Your total salary for the year before tax is not more than R500 000; and
    • You have only one employer; and
    • You have no car allowance/ company car/ travel allowance or other income (e.g. interest or rental income); and
    • You are not claiming tax-related deductions/rebates (e.g. medical expenses; travel and retirement annuity contributions, other than pension contributions made by your employer)
  2. Don’t leave it to the last minute
  3. Don’t throw away your documentation
  4. Do your research on what expenses you can claim
  5. Find out about any tax incentives that may apply to you.

Documentation required

SARS provides an extensive list of supporting documentation that will be required for filing your return, but in essence all documentation which supports your claim must be submitted. Make sure that you cover:

Income

IRP5/IT3 (a) from your employer

  • Proof of rental income (if applicable)
  • Business/Services Income
  • Consulting invoices (valid tax invoice)
  • Interest Income       
  • Dividend Income
  • Royalties
  • Pension or Retirement Fund Lump sums
  • Investment earnings

Expenses

  • Qualifying tax-deductible business expenses
  • Medical Aid Tax Certificate
  • Retirement annuity tax certificate
  • Log book if travel allowance or car allowance is claimed
  • Rental expenses (rates and taxes, levies, telephone, internet, water and electricity, depreciation of equipment or furniture and fittings, insurance, interest on bond, security, cleaning supplies and repairs and maintenance)
  • Business income expenses (telephone, internet, insurance, vehicle expenses, subscriptions, home office expenses and depreciation of equipment/vehicle)

Capital Gains

  • Proof of sale of asset
  • Conveyancer Certificate

Taxes

  • PAYE
  • Medical Aid Tax Credits
  • Foreign Tax Credits (tax already paid in another country)
  • Tax Incentive Certificates (if applicable)
  • Section 12J Venture Capital Company Investment Certificate
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