Contrary to what many people believe, submitting a tax return doesn’t automatically mean that you must pay tax.
If you earn a salary, your employer must deduct tax from it and pay it over to SARS on your behalf. When you submit your return, SARS compares your return with what your employer has submitted and determines if there is any additional tax that must be paid.
If you have other income other than a salary, you must submit additional information to SARS to inform them of your income which is not a salary.
A tax year for an individual runs from March to February the following year.
Here’s what you need to know when it comes to personal returns.
There are two main types of income tax returns for individuals – annual returns and provisional returns.
The ITR12 (jargon buster ? aka your annual income tax return)
- This return is due for submission usually between six and nine months after the end of the tax year. SARS publishes these dates yearly and has advertising campaigns to ensure the public is aware of the deadlines. Speak to your accountant to confirm the dates each year.
- There is some documentation that you must keep on file to ensure that your return submission goes smoothly:
- IRP5 (for salary earners)
- Interest income tax certificates
- Medical aid tax certificates as well as proof of payment of any medical expenses paid by yourself.
- Pension fund/retirement annuity tax certificates
- Travel logbook which has details of personal and business travel (only if you receive a travel allowance or have been given the company car to use)
- Donation certificates for donations made to s18A organisations
- Documents and receipts for commission-related income
There are other deductions that SARS allows, so be sure to discuss your personal situation with your accountant to ensure you don’t pay more tax than you should.
The IRP6 (jargon buster ? aka your provisional income tax return)
For the most part, you’re considered a provisional taxpayer if you earn income other than a salary. There’s always fine print when it comes to such matters, so be sure to check with your accountant whether you are one or not.
- All provisional taxpayers must submit a “provisional” return every six months. One return in August and the other one in February each year.
- For the August return, your accountant will estimate the amount of “other income” you will earn for the full twelve months, calculate the tax that will be payable and then divide by it by two to give the amount due for August.
- In the February return, your accountant must now forecast how much you might have earned for the full twelve months, calculate the tax that is payable and then deduct the tax that was already paid in August to get the amount payable in February.
- When the ITR12 is submitted, the final tax payable is reduced by the tax payments already made in August and February of the previous year.
- Depending on how well the accountant estimated the tax payments, you will either need to make a top-up payment, receive a refund or not need to make any payment at all.
Most individuals do not believe that they must hire the services of an accountant to deal with their own taxes. We recommend that you engage an accountant if your income stream changes.
This means that if you have always earned a salary and now have income from your side-hustle or have left the cushion of a salary to start your own business, engage an accountant to understand what you need to submit and all the documentation and information you need to keep on file.
Your accountant should give you advice on where possible tax savings might be as well.
