By Janine Lodewyk of Sentinel International.
SARS has been sending auto-assessments via SMS and email. While you may think this will save you time, it’s actually more likely to cost you money.
Filing season for 2021 tax returns opens on 1 July 2021. SARS has, however, already commenced with the issuing of auto-assessments. These auto-assessments are being communicated to taxpayers directly via SMS and/or email. Please do not accept any auto-assessments from SARS without consulting us first.
WHY YOU SHOULD BE WARY OF AUTO-ASSESSMENTS
The auto-assessments may result in you losing out on your full refund or, worse still, not receiving a refund at all. The auto-assessment does not include any additional permissible tax deductions such as additional medical expenses, donations, home office deductions, travel allowance deductions or any expenses incurred in the production of income.
What’s more, the auto-assessments do not include any additional income such as foreign investment income, capital gains, rental profits or losses or any foreign income. The omission of such additional income may result in SARS penalising you for undeclared income. SARS may also require the submission of your supporting documents for verification which could lead to additional assessments. The process of correcting an incorrectly issued assessment can be both expensive and time consuming.
PERSONS NOT REQUIRED TO SUBMIT A TAX RETURN
You are not required to submit a tax return if you earn less R500,000 per annum – provided you comply with ALL of the following criteria.
- You only receive fixed South African source employment income subject to PAYE from one employer for the full tax year (this does not include commission or contracting income and it does not apply if you changed employers during the year).
- You have no other form of income (eg. fringe benefits such as a travel allowance, business income, rental income, taxable interest income or any other form of investment income or capital gains tax event, trust distributions or foreign income).
- You have no allowable tax deductions to claim (eg. medical expenses, retirement annuity contribution, donations, travel allowance deduction or expenses in the production of income against commission or contracting income).
These limitations preclude most of our clients.
Not submitting a tax return can have other consequences
- You might miss out on a tax refund.
A tax refund may be due to you if you or your employer paid too much tax to SARS. Remember, though, you need to be filing tax returns diligently every year in order for SARS to release your refund. Something as simple as claiming medical expenses or working for less than twelve months of the year may trigger a tax refund, depending on your situation.
- You may not be able to borrow money.
Often the bank requires a tax clearance certificate and a copy of your last assessment from SARS when they are considering a loan, mortgage or credit card application. This can only be obtained if all of your returns are up to date and filed appropriately.
- You may receive penalties.
If you normally submit, but this year you don’t, SARS could impose administrative penalties later on for not being compliant. These penalties are invoked by SARS at their discretion.
- You may not be able to access your retirement fund.
Filing a tax return every year means that you won’t have hassles getting your money if you require a lumpsum pay-out from a fund at any stage. If you retire or are retrenched, or you just need to take money out of your fund early, you need to be tax compliant as the investment house needs to obtain a tax directive from SARS before releasing your monies.
- You may not be able to take funds offshore.
Should you wish to take funds offshore you will need to apply for a foreign investment tax clearance certificate from SARS. A complete filing record limits expedites the applications approval considerably.
- A complete record stands in your favour.
Having an unbroken filing record leaves SARS with no reason to suspect that you are hiding information from them. Filing a tax return means you are being a good citizen and contributing positively towards society.
INCOME TAX DEADLINES FOR THE 2021 TAX SEASON
1 July 2021 Commencement of online tax return submissions for the 2021 tax year covering the period 1 March 2020 until 28 February 2021.
31 August 2021 2022 01 | Submission & payment of provisional tax for the first period of 2022 (1 March 2021 until 31 August 2021).
30 September 2021 2021 03 | Payment of provisional tax top-up for the 2021 tax year based on actual figures for the period 1 March 2020 until 28 February 2021.
23 November 2021 Deadline for the online submission of non-provisional taxpayers’ income tax returns for the 2021 tax year (1 March 2020 until 28 February 2021).
31 January 2022 Deadline for the online submission of provisional taxpayers’ income tax returns for the 2021 tax year (1 March 2020 until 28 February 2021).
28 February 2022 2022 02 | Submission & payment of provisional tax for second period of 2022 (1 March 2021 until 28 February 2022).
Further reading
If you are even slightly confused about provisional tax, we urge you to read our recent article Understanding provisional tax. Furthermore, the Insights section of our website contains a plethora of articles pertaining to tax, legacy planning and other financial and legal issues.
If you still have questions about when and whether to file your tax return, please don’t hesitate to contact us on 021 674 039.