Tax Season 2019
Tax Season 2019 starts on 1 st of July 2019. Tax season is around the corner once again. Here's why you should be wary of the R500 000 threshold as announced by SARS and insure that you understand exactly whether you should submit a return or not.
The South African Revenue Service (SARS) announced that it has increased the tax return threshold from R350,000 to R500,000.
This means that individuals earning less than R500,000 will not need to submit personal income tax returns (ITR12).
“People should be very wary not simply ignore filing their normal tax returns as there is always the possibility of getting a tax refund due to additional tax deductions and/or tax credits only allowed upon assessment,” said Prof Herman Viviers of North-West University.
Viviers also cautioned that although individuals might earn less than R500,000 a year, they should take into account their retirement annuity fund contributions and allowances (received from an employer) as these usually results in additional deductions to be claimed upon assessment which could result in a possible tax refund.
Individuals above the age of 65 with large medical expenses not recoverable from their medical schemes also need to declared these on their income tax return in order to qualify for the additional medical expenditure tax credit to be claimed upon assessment.
Individuals will lose out on these deductions and tax credits if they do not submit their tax returns.
“The main reason for SARS lifting the threshold is that it lessens their administrative burden of processing tax returns from the lower income-earning group,” said Viviers.
“The fewer returns submitted the less admin for them. It also holds the same administrative benefits for the taxpayer.
“But, like I said, individuals should be cautious. They should evaluate their tax position and although not submitting their returns might seem like an enticing prospect, they should evaluate if they are in line for deductions and tax credits,” said Viviers.
If uncertain, individuals should consult with a registered tax practitioner, as the non-submission of tax returns could results in non-compliance penalties to be levied in terms of the Tax Administration Act.
The Commissioner of SARS, Edward Kieswetter, did say that there are exceptions to the R500 000 rule. They are:
Income can only be received from one employer;
There must be no other income such as from a car allowance, business income, taxable income or money made from renting;
There must be no additional deductible allowances, such as medical expenses, travel expenses or retirement annuities.
Source : www.businesstech.co.za