Income tax doesn’t have to be scary, and it doesn’t have to give you a headache either. Magdel Louw has all the answers

What exactly is tax and why do we have to pay it?

Income tax is the government’s main source of income.

Who has to register for it?

• If your gross earnings from either a salary, commission or fees for a tax year are above a specified amount, you have to register for income tax.

• If you’re younger than 65 and earned more than R70 700 in the 2014 tax year, you must register.

• So should an individual who is between 65 and 75 and has earned more than R110 200. And if you are older than 75 years, the amount increases to R123 350.

How do I register?

1 You must complete an IT77 form, which you’ll find at www.sars.gov.za, a branch office or a Sars Contact Centre. Once you have completed the form, take it to a Sars branch office, along with either your ID, passport or driver’s licence.

2 Once you’ve been registered, you will get your tax number.

What is a tax return?

It’s a form (ITR12) on which you, as a taxpayer, state your income and personal circumstances.

Based on the income you’ve declared, Sars calculates the amount of tax you were meant to pay and your tax-deductible expenses. In some cases, it may even result in a refund.

A tax return covers the last tax year, a 12-month period that starts on the first day of March of the previous year and ends on the last day of February the following year. So for this year’s tax return, it will only cover the income you’ve received from 1 March 2013 to 28 February 2014

Does everyone have to submit a tax return?

If you earn less than R250 000 for a full year from one employer (that’s your total salary income before tax) and you do not have other sources of additional income (for example, interest or rental income) and no deductions that you want to claim (such as medical expenses, travel or retirement annuities), then you don’t need to submit a return.

When and how do I send Sars my return?

You will be required to submit a return manually or electronically during the annual tax season. For most taxpayers, this runs from July to November every year. You can complete and submit your return to Sars using the following channels:

• Via Sars eFiling on your computer. A free, online process, this service allows you to register, submit your tax returns and make payments to Sars in a secure environment. Simply register at www.sarsefiling.co.za.

• You can also access a mobisite version of the Sars eFiling website through your smartphone, or you can download their eFiling app on your tablet or smartphone.

• Go into a Sars branch where an agent will assist you – don’t forget to take all your documentation.

• Request that a return be posted to you. Complete it manually by posting it back to Sars, or putting it in a drop box at a Sars branch.

What do I need to complete my tax return?

There are a few documents you’ll need for your return. Don’t submit these themselves to Sars – just keep them safely in your possession for at least five years in case Sars needs access to them in future. This is what you’ll need:

• Your IRP5/IT3(a) certificate(s) that you will get from your employer

• Medical aid certificates and the documents required for claims

• Pension and retirement annuity certificates

• Banking details

• Travel logbook (if you receive a travel allowance)

• Tax certificates received in respect of investment income (IT3(b))

• In case of disability, a completed confirmation of disability (ITR-DD)

• Information relating to capital gain transactions, if applicable

• The approved VDP (Voluntary Disclosure Programme agreement) between yourself and Sars for the years prior to 17 February 2010, where applicable

• Financial statements, for example business income, where applicable

• Any other documentation relating to deductions you want to claim or income you received.

How does Sars work out how much tax you should pay?

If your taxable income does not exceed R174 550 a year, you’ll pay 18% tax. If it exceeds R174 550, but not R272 700, you’ll pay R31 419 tax, plus 25% of the amount by which your income exceeds R174 550.

If your taxable income exceeds R272 700 a year, but not R377 450, you’ll pay R55 957 tax, plus 30% of the amount by which your taxable income exceeds R272 700.

If your taxable income exceeds R377 450, but not R528 000, you will pay R87 382 tax, along with 35% of the amount by which your taxable income exceeds R377 450.

What happens if I’m supposed to submit a tax return, but don’t?

You will be charged penalties and interest if you do not submit it by the deadline or understate your income. The fine depends on the taxpayer’s taxable income for the tax year.

What do I do after I’ve submitted my tax return?

Nothing. Sars will notify you if you have to make additional payments. They may also decide to audit your income and expenditure. They will indicate which of the supporting documents listed are needed.

How do I pay outstanding taxes?

There are a number of options, for example at a bank, eFiling, EFT and at a Sars branch.

Provisional tax…

What? By spreading the income tax burden over the tax year rather than paying one large amount after assessment, provisional tax lightens the load.

Who? A provisional taxpayer is a company or any person who gets income from doing business.

How much? The payments are based on a taxpayer’s estimated taxable income for a specific tax year. The final income tax liability for that tax year will then be determined upon assessment.

How? A taxpayer must fill in their estimated taxable income and provisional tax payable for the tax year on an IRP6 form. Payment can be made to Sars via the internet banking facilities or over the counter at a bank.

When? Two payments are made – the first in August each year and the second in February the following year.