Start getting your tax affairs in order in June so that you can complete your annual tax return. We’ve got the information you need to get ready for the 2020 tax season, and advice from the experts on what to do to make sure your tax affairs are correct and in order.
When does tax season start and end?
Tax season, the months in which you need to complete and submit your tax returns to SARS (South African Revenue Service), runs from 1 June 2020 to 31 January 2021 for individual taxpayers.
Top tip: Before tax season starts, or early in tax season, make sure SARS has your email address and cell number, as well as bank account details, so they can contact you and pay any refunds due. You can update this on eFiling, the mobi-app or call SARS or your tax consultant for assistance.
Do I need to submit a tax return?
Yes, if you are a provisional taxpayer. Provisional taxpayers include taxpayers who earn an income in addition to a salary, such as rental income from a second property or interest and dividends from an investment, and those who own their own businesses. They have until 31 January 2021 to submit their tax return.
If you are not a provisional taxpayer and you earn over R500 000 a year you need to file a return. However, SARS may auto-assess you, which means that SARS will complete the return for you, and you can choose to accept or decline the auto-assessment.
If you earn between R79 000 and R500 000 a year and are not a provisional taxpayer, you need to file a return only if:
- SARS asks you via SMS or email to file a return
- You have multiple deductions and allowances coming off your salary such as medical aid, pension fund contributions, or a travel allowance
As above, SARS might be auto assessing many of these taxpayers.
If you earn less than R79 000 a year and are under age 65 you do not pay personal income tax so there is no need for a return.
How do auto-assessments work
SARS collects information from your employer such as your salary details, how much tax you’ve paid, and details of any allowances and deductions such as pension fund and medical aid contributions. They also collect information from other companies such as your investment company who has details of investments, interest earned and retirement annuity contributions. Your medical aid also gives information to SARS including what you paid, and any claims not paid by medical aid.
SARS then uses this information to complete your tax return. If SARS believes they have all the information they need, they will assess your return and send you this assessment. If they don’t have the information they need, they will advise you that you need to complete a tax return yourself and send it to SARS.
When will this happen?
SARS is going to send auto assessments in the months of June, July and August. You will be notified by SMS or email of an assessment. SARS has also said they are going to notify taxpayers who need to submit their own return in these months.
What do I need to do?
If you receive an auto assessment from SARS
SARS will ask you to accept or reject this assessment.
Your auto assessment should include details of how your tax was calculated, and if there is any tax due, or if you are due a refund.
When you receive an auto assessment you should check it for accuracy says Adelaide Kekana, a tax consultant at Tax Consulting South Africa. She says that you may have undeclared income that SARS is unaware of. If you don’t declare this you may be prosecuted, and penalties and interest can be charged. An example of undeclared income is when you rent a room in your home or have a little sideline business selling items for cash.
According to TaxTim, you may also be liable for tax deductions SARS is not aware of, like home office expenses or donations to a registered charity. If SARS doesn’t have this information you may end up paying more tax than you need to. These are the more common deductions allowed by SARS, subject to certain limits which you can ask your tax consultant about or read about here:
- Pension fund and retirement annuity contributions
- Medical aid premiums and other medical expenses
- Travelling expenses, only with a full record and logbook
- Donations to recognised charitable institutions, or to family members
- Interest income
- Home office expenses
“The SARS system is not designed to maximise all legal tax claims, so by just accepting the SARS assessment, you may pay too much tax or not optimise your tax refund,” Adelaide says.
So always, always check your auto assessment.
If you agree with the assessment you can accept it. If you believe the assessment is not accurate or correct, reject the assessment and file your own return on eFiling. You have until 16 November to file your return online.
If you receive an SMS from SARS saying you need to file a return
You need to complete your tax return, which you can do on e-Filing or on the SARS mobi-app, by 16 November.
To complete your tax return you will need your tax certificates from your employers, from any fund you have made retirement savings contributions to, as well as tax certificates for your savings and investments. Also make sure you have documentation from your medical aid and details of claims medical aid did not pay so you can include these in your tax return.
You can choose to file your own return or get an expert to help you. This article can help you decide.
If you don’t hear from SARS at all
You need to contact SARS or ask your tax consultant for assistance as SARS may just have missed you or may not have updated contact details. Although SARS is trying to automate as much as possible, you cannot assume that if they don’t contact you, you don’t need to complete a return. You must confirm this with SARS.
Do I have to do everything online?
No, you can still file a hardcopy tax return, which you must do by 22 October. If you are going to a SARS branch, it is best to make an appointment.
SARS wants to make tax quick and easy
SARS is modernising and this year’s tax season is very different to the previous tax seasons, Adelaide says. Effectively, you are waiting for SARS to either send you an assessment or ask you to file your own return. If you haven’t heard anything from SARS by the end of August, remember to contact them or ask your tax consultant to find out what you need to do. And keep in mind, it is a new process for SARS so there may be a few teething problems and some patience may be required.
Completing your annual tax return needn’t be too difficult or stressful if you keep your records, follow the instructions from SARS, and get expert advice if you need it.