Who Pays Tax in South Africa?
People who pay income tax are generally individuals who earn an income (from a salary, commission, fees, etc.).Corporate tax includes tax paid by companies or close corporations, as well as trusts, on their annual income.
What many people need to be aware of is that most of the State's income is derived from Income Tax (personal and corporate tax), although nearly a third of total revenue from national government taxes comes from indirect taxes, primarily Value-Added Tax (VAT).
However this year, SARS announced that all taxpayers whose total employment income is not more than R500 000 will not have to file an income tax return this year. But what does that mean and how do you qualify for this exemption?
This year taxpayers who meet ALL of the following criteria need NOT submit a tax return:
- Their total employment income for the full year before tax is not more than R500 000
- They only receive employment income from one South African employer for the full tax year
- They have no other form of income (e.g. car allowance, business income, and rental income, taxable interest or income from another job)
- They do not have any additional allowable tax related deductions to claim (e.g., medical expenses, retirement annuity contributions, and travel expenses)
This year as well some individuals will receive a simulated outcome from SARS as if they had filed a return. The outcome will be based on information that SARS has received from employers and other third-parties. This is to further reduce unnecessary trips to SARS branches, but the taxpayer can accept this outcome or update the return and file. This however does have its limitations as should some of the taxpayer’s income not be reflected on SARS’ system (e.g. the third party did not report to SARS), the taxpayer must submit a tax return in order to capture the necessary information regarding the income.
In the same vein, where certain tax deductions and/or credits have not been reported to SARS through third-party reporting, the taxpayer should submit an income tax return in order to enable them to claim the deduction and/or credit (some basic examples would be additional qualifying medical expenditure, wear and tear on a laptop acquired for work purposes, etc.).
A taxpayer who has ceased SA tax residence during the year of assessment must submit an ITR12 in order to inform SARS of the change in tax status, as well as report any deemed capital gains due to the exit charge. This is a quite complex procedure and this may need the help of a tax consultant to ensure that it is completed correctly.
The important dates for non-provisional taxpayers is from 1 July 2019 to 4 December 2019. Provisional taxpayers have until 31 January 2020 to file via eFiling.
There is an important piece to remember this year, as of last year, failing to submit a tax return can result in a criminal record for non-compliant taxpayers. SARS has always been able to do this in terms of the law, but in the past elected to only fine offenders. They have now taken a much more firmer stance on individuals who fail to comply.
Does Your Accounting Firm Offer You Everything To Ensure You Are Getting The Best Out Of Your Business?
Myers, Tennier and Co. is always looking at ways in which we can benefit our clients and offer services that you wouldn’t normally expect to receive from a firm of accountants. What make us different to our competitors is very simple.
Firstly we are at the heart of the business community and because of this we understand local issues, because they affect us too. Due to this simple fact, we will work in partnership with your team, offering advice and assistance with expertise delivered at a domestic level to assist you on your journey of success.
Secondly we are not just great with numbers, we also have a philosophy around adding value to your business. Any firm can offer you simple practices like performing mainstream audits, accounts and tax compliances. To us it is all about listening and being there when you need us. Being in business for over 45 years, we have seen and heard it all so we offer a wide range of assurance and specialist advisory services that are modelled around your business needs, it’s about working in partnership with you to help your business achieve its objectives. You are not only a client, you become family.
And last but not least, we believe in supporting business growth, because our business has grown and will continue to grow as our clients businesses grow. With over 45 years of experience in South African markets and business, we have gone through the same highs and lows and suffered the ups and downs of building a business as many of our clients have. We understand your challenges because they are our challenges too. We want to help your business grow and succeed which is why we have a range of services to offer you. We can access these outside of the mainstream accounting function, the services are designed to help you overcome the issues associated with developing and growing a business in today’s competitive environment.