Our quick 10 point reference guide will enable you to file your tax return early and honestly and avoid the last minute rush.
We have compiled these 10 tips to make sure you file your tax return effortlessly.
1. Know which deductions are allowed
Knowing what you are allowed to deduct is as important as having all your supporting documents available. Here is your quick re-cap.
2. IRP5 Tax Certificate
Ask your employer to provide you with your IRP5 so you can compare this to the one submitted to SARS. Correlate your IRP5 details, your employment income and deductions as well as the PAYE paid. Any incorrect details might impact the finalization of your return.
3. Tax practitioner
If you are using a registered tax practitioner be sure to inquire whether they are registered with a controlling body such as the South African Institute of Professional Accountants (SAIPA) or the South African Institute of Tax Practitioners (SAIT).
Be sure to also check that your practitioner is allowed to perform the tax duties they are performing. The controlling body is regulating what a tax practitioner can and cannot do.
4. Tax certificates
As soon as tax certificates arrive from your bank, investment house or charity, store them electronically in a folder marked “2013 Tax Season”. When SARS requests supporting documents for the data you’ve submitted, you are well prepared and have everything at hand. These would include IT3b interest certificates, IT3c capital gain/loss certificates and Section 18A donations exemption certificates.
5. Medical aid
The 2013 year represents the first time the new Medical Aid Tax Credit system is applicable so taxpayers need not get alarmed if they don’t see deductions, but tax credits against tax payable rather. Be sure to keep your medical aid certificate as well as all proof of payments and medical prescriptions for out of pocket medical expenses.
6. Log book
If you receive a travel allowance make sure to have kept a log book and keep copies in case the South African Revenue Service (SARS) asks you for proof of business travel.
If you have received any dividends during the tax year then your investment institution will send out a certificate stating the gross amount and the amount after the 15% tax has been withheld. Previously dividends had been exempt from tax, but as of this tax year they are subject to a withholding tax. You won’t need to pay any further tax from the amount received in your bank account or on the dividend amount which gets reinvested, but this information will be needed when you file your tax return.
8. Property Capital Gains
If you owned a property prior to October 1, 2001 and you sold that property in the tax year be sure to have the valuation certificate available in case SARS asks for it.
This valuation will be used as part of the calculation of the base cost to determine the Capital Gains Tax payable on the sale of the property.
9. Business income
If you earned income from a side business, remember to keep records of all incomes and business related expenses and include them in the “local business” section of your income tax return. Be sure to have valid proof of all the amounts included in this section as SARS is very likely to ask for you to validate your amounts submitted.
10. Banking details
Make sure that your banking details that SARS has on their system is up to date. If they are not then you need to go into a SARS office and update accordingly. Should your return assessment result in a refund, this refund will not be released by SARS until you have validated your new banking details.
Lastly, be very careful with the information you are including when completing your tax return. Double check that all information is correct against any documents you have. SARS can penalise for errors they call “failure to take due care” in completing one’s return. These possible penalties can be quite severe.