Written by Zelda Mulder | 30 June 2022
The 2021/2022 Tax Filing Season opens on the 1st of July for individual taxpayers. SARS notified clients that tax submissions have to be submitted by 24 October 2022. it is important to take note of the shortened time frame and to prepare for your submission.
Who is required to submit a tax return this tax season:
- If you have worked for more than one employer in the assessed year you must submit a tax return.
- If you are contributing to a retirement fund.
- If you earn income from more or one source.
- If you pay for your medical aid in a private capacity.
Who is not required to submit a tax return:
- Income for the tax year is below the R500,000.00 threshold.
- Remuneration is paid from one employer.
- You have no travel / car allowance or fringe benefits that can be seen as additional income.
- Your employee tax (PAYE) has been deducted or withheld.
- You did not earn any other additional income such as rentals, dividends, interest etc.
SARS will continue to auto-assess these individual taxpayers. This will be pre-populated with information from employers, financial institutions, medical schemes and retirement fund administrators, Taxpayers who are auto assessed will have an opportunity to manually file their returns should they not agree to the auto-assessment.
However, it is recommended to be careful of just accepting the auto-assessment. It is vital that you check the information that is used to populate the auto-assessment to ensure that this is correct and up to date.
The following information is needed to complete your tax return:
- IRP5 tax certificate from your employer.
- Retirement Annuity and / or Pension Fund contribution certificates.
- Medical Aid tax contribution certificate
- This will also include information on what medical expenses the medical has not paid.
- IT3(b) and (c) certificate for dividends, interest and capital gains earned.
- If you have received a travel allowance, the travel log related to the allowance.
- Proof of any additional Income earned received by the taxpayer during the tax year.
Ways you can save on taxes with rebates and tax deductions:
SARS can reduce the amount of tax that you need pay by allowing a tax deduction or a rebate. A rebate is a reduction of the actual tax amount due on your income for the year depending on certain conditions and circumstances being met.
The most common rebate is a tax deduction that is determined by your age:
- Primary Rebate – Under 65 years
- Secondary Rebate – Between 65 and 75 years
- Tertiary Rebate – over 75 years
This rebate is adjusted annually and depending on your age group, you could qualify for a primary, secondary, and tertiary rebate. This is normally already calculated by your employer within the monthly PAYE amount that you pay and will not affect your final tax submission.
A second tax rebate you can qualify for is related to medical costs. If you belong to a medical aid you will receive a tax rebate per member on your medical scheme. This is called a Medical Schemes Fee Tax Credit and is a flat rate per month and does not take your taxable income into consideration. Gap Cover and medical insurance does not qualify for this benefit. For the 2021/2022 tax year the rebate was R332 per person per month for the first two members and R224 per month for every additional member thereafter. It will be a direct deduction on your tax liability. A deduction is an amount that will lower the income amount that is used to calculate the tax due in a tax year.
Ensure that you have a tax certificate from your medical aid provider to support your tax credits. If you incur additional medical expenses that your medical aid did not pay, you may qualify for an extra rebate. However, this will be determined by the amount you had to spend. In order for this to make a difference on the tax payable, these expenses have to be more than 7,5% of your income. Qualifying expenses includes doctor prescribed medication and consultations with medical practitioners. It is important to keep record of these expenses that you paid over and above your medical aid cover. You can send proof of these expenses to your medical aid for them to note this on your medical scheme tax certificate as expenses not paid.
Contributions to retirement funds are also deductible for tax up to a limit of 27,5% of the greater of your taxable income or remuneration to a maximum of R350,000.00 per year. The limits will be limited to the total contributions you make to any Retirement Annuity, Pension or Provident during a tax year. To claim the tax deduction, you will need to have proof of your contributions and the financial service provider will provide you with a Retirement Annuity Fund Contribution Certificate (IT3F) for retirement annuities. Pension and Provident fund contributions will be noted on your IRP5 from your employer. The deduction for your retirement fund contributions can also lower your taxable income amount. Example: If you contribute R500.00 pm to a retirement annuity and you earn R10,000.00 per month, you should be income tax on R9,500.00 per month instead of the full amount.
If SARS auto-assessed you, your auto-assessment may not reflect the above deductions and you will need to submit a tax return. If you paid too much tax on your taxable income you can possibly receive a refund from SARS. It is important to remember that you need to pay taxes and submit your tax returns every year to receive a refund. A refund should ideally be used to supplement retirement savings and you will then be able to qualify for an even larger deduction the following year. Your financial adviser will be able to assist you in structuring your investments to receive the best possible tax income.
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