The 2022 tax filing season, which opened on 1 July, runs until 24 October 2022 for non-provisional taxpayers, making it a shorter season than previous years. With less time to file your returns, it is important that taxpayers begin collating the necessary information and documentation so that the deadlines are met, and fines are avoided. If you are a provisional taxpayer, keep in mind that your deadline for submission is 23 January 2023.
Sars will once again be auto-assessing a large number of taxpayers, and it is important to understand how this process works and what deadlines apply. In performing the auto-assessment, Sars will gather information from third parties such as employers, financial institutions, retirement fund administrators and medical schemes – and will use this information to prepare an automatic tax return for you which you should be notified of via SMS at the beginning of the tax season.
While previously, taxpayers had to either ‘accept’ the auto-assessment or ‘reject’ it by editing the return, this year is different. If you are happy with your auto-assessment, you are not required to take any action. If you are not satisfied with your auto-assessment, you can access your tax return online, make changes, and submit it. However, it is important to note that taxpayers will only have 40 days from the assessment to file a return if they are not satisfied with their auto-assessment, meaning that time is of the essence.
Sars has become a lot stricter when it comes to imposing penalties for late submissions, with penalties being based on a taxpayer’s taxable income – meaning that penalties can range from R250 per month to in excess of R16 000 a month for each month that the taxpayer remains non-compliant, and can be charged for up to 35 months. Avoid being complacent when it comes to tacitly accepting the auto-assessment as it is possible that Sars is not in possession of all your information which may result in you paying more tax than is necessary or possibly missing out on a refund which may be due. If in doubt, rather seek timeous advice from a registered tax practitioner.
To determine whether or not you are required to file a tax return, it is important to understand the tax thresholds and what constitutes taxable income. The tax threshold for the 2022 year of assessment for normal taxpayers below the age of 65 is R87 300. For those older than age 65, income in excess of R135 150 is taxable, while for those over age 75 the threshold is R151 100. However, if you earn less than R500 000 from a single employer, have no other sources of income, and do not claim deductions for business expenses, you may not be required to submit a tax return.
Remember that, as a South African tax resident, Sars requires you to disclose all foreign assets and funds held during the 2022 tax year, as well as all foreign-sourced earnings regardless of the level of earnings.
According to Sars, income that you can be taxed on includes:
Income from employment (salaries, wages, bonuses, fringe benefits, etc);
Trade or business income;
Investment income such as interest, foreign dividends and dividends from Reits;
Income or profits arising from being a trust beneficiary;
Annuity income; and
To ensure that you claim for all available tax deductions and that you have all necessary information at hand, consider the following checklist:
Your IRP5 and IT3(a) certificates are provided by your employer in respect of remuneration which has been paid or has become payable. An IRP5 discloses the total employment remuneration earned for the year of assessment and the total amount of employees’ tax deducted or withheld. An IT3a shows employee earnings from which tax has not been deducted. If you have investments in place, you may also require an IT3(b) certificate which is provided by your investment provider summarising any local or foreign interest and dividends earned. If you have disposed of any investments during the tax year, you will need an IT3(c) summarising any disposals you may have made relating to the holding of investments. An IT3(s) certificate is issued to a taxpayer by a banking or financial services institution containing information related to a tax-free savings account.
Retirement annuity contributions
If you contributed to a retirement annuity during the year of assessment, keep in mind that you can claim a tax deduction on any contributions made up to 27.5% of your taxable income, subject to a maximum of R350 000 for the year. Your retirement fund administrator should provide you with your IT3(f) certificate which sets out the contributions made towards your RA during the year of assessment.
If you receive a travel allowance from your employer, you are able to claim a deduction for the use of a private motor car for business purposes, and to claim for this you will need to keep a travel logbook up until 28 February 2022. Your logbook should record the opening odometer reading on 1 March 2021 and the closing reading on 28 February 2022, the total kilometres driven for the full year, and the total business kilometres for the year. Further, in respect of each business trip, you will need to record the date of travel, the number of kilometres travelled, and the details of the trip.
Your medical aid should have sent your medical aid tax certificate through to you which details exactly how much was paid to the medical aid for you and your registered dependants during the tax year. It also sets out how much you paid for other medical expenses which you claimed for but which were not covered by the medical aid. If you have not yet received your medical aid tax certificate, keep in mind that most providers have a self-service online portal where you can download your certificate.
If you have made donations towards an approved Public Benefit Organisation during the year of assessment, you may be able to claim the tax back. In terms of the Income Tax Act, you are able to donate up to 10% of your taxable earnings towards a PBO on a tax-deductible basis, and to claim for this you will need a Section 18A certificate issued by the PBO.
Home office expenses
If you are employed but have been working from home during the tax year of assessment, you may be able to claim for certain running costs, although this area of tax can be tricky to navigate. Firstly, it is important that you have a dedicated workspace at home which is set aside specifically for the purpose of your trade. In terms of the Income Tax Act, a tax deduction for home office expenses will only be considered if the room is used exclusively for your trade and if it is specifically equipped for that purpose. Further, more than 50% of your duties must be performed in your home office. Home office expenditure for tax deduction purposes includes rental, the costs of repairs, rates and taxes, cleaning costs, electricity, office equipment, furniture and fittings, phones, internet, and stationery, amongst other things. To claim for these deductions, you will need to provide documentary proof, keeping in mind that these expenses will be calculated on an apportioned basis. Should you qualify for a deduction in respect of a home office, you will need to enter the amount calculated next to the source code 4028 (Home Office Expenses) in the Other Deduction container on your Income Tax Return.
How does Auto-Assessment work?
— SA Revenue Service (@sarstax) July 19, 2022
There’s a slight change to the revenue collector’s auto assessment this year.
If you agree with the auto-assessment once you’ve viewed it, you do not need to do anything further – the return will be regarded as submitted and final.
If you are not in agreement with the assessment, you can access your tax return via the eFiling site or the SARS MobiApp, complete the return, and file it.
This must be done within 40 business days from the date that your assessment was issued to you.