Covid-19 and technology updates have resulted in this year’s tax filing season being a little different to the ones before.
The biggest change is how short it is. Tax filing season usually opens on the 1st of July, but this year due to lockdown and an attempt to limit movement and keep people at home, SARS is only opening tax season on the 1st of September!
The second big change this year is the implementation of “Auto Assessments”. For a couple of years now, taxpayers who met a specified set of criteria were not required to submit tax returns. These criteria were:
- You earn income from one source only – salaried employment
- Your total income for the year came to R350,000 or less
- All your taxable deductions reflect on your IRP5 from your employer
If you could say yes to all three, then SARS would file your tax return on your behalf using the info on your IRP5.
This still applies this year, but SARS has widened the net a little. Now, a large number of taxpayers (regardless of total income) will be auto-assessed by SARS during the month of August. SARS will use the information supplied by employers, financial institutions, retirement fund administrators and medical schemes to complete your tax return for you. They will then issue you with an auto-assessment that you will be able to have a look at in efiling.
If you accept the outcome of this assessment – in other words if you consider everything on it to be true and correct and to accurately reflect your income and deductions – then you will not have to file a 2020 tax return at all.
However, if you have income or expenses that don’t come up on an IRP5 or fund certificate (such as rental income or your logbook related to your travel allowance), then it is recommended that you do not accept the auto assessment from SARS and that you rather opt to do a normal 2020 tax submission.
It is very important to remember that SARS is not accepting any liability if your auto assessment is incorrect in any way. If you accept their auto assessment and they later discover that you under-declared income then you will be liable for penalties and interest. So be very sure that your auto assessment accurately reflects your tax affairs before accepting it!
In order to make sure that your auto assessment is accurate, make very sure that you have received every single one of your tax certificates and other relevant documents for the year before tax season starts.
Your tax documents can include (but are not limited to) the following:
- IRP5/IT3 certificates from employers
- IRP5/IT3 certificates from funds (pension funds or retirement annuities that pay you monthly)
- Medical Aid tax certificate
- Retirement Annuity tax certificate
- Pension/Provident Fund tax certificate
- Investment tax certificates (IT3(b) and IT3(c)s) for dividends, interest and capital gains (earned or lost)
- Interest tax certificates from your bank
- Donation certificates from any PBO you gave money to
- Your business travel logbook (if you have a travel allowance)
- Rental income & expense summaries
Get your tax documents together and make sure you understand them before you check your auto assessment from SARS.
When in doubt, do not be shy to ask for professional help from a registered tax practitioner! If you don’t know one, we know two excellent ladies who can help, give us a shout.