The South African Revenue Service (SARS) announced earlier this year that the 2017/18 tax filing season is to kick off on 1 July 2018, however, their e-filing system is already allowing submission of tax returns.
SARS also appears to drive tax compliance home with renewed vigour this year, with a shorter tax season, as well as a couple of enhancements on the new 2017/18 tax return.
Here are important hints for the tax filing season:
- IRP 5: Check that your employer-issued IRP5 certificate is correctly reflected on the tax return. Where you do not have a South African identity number, for example, an expatriate working in South Africa, your IRP5 certificate will not be pre-populated and you need to obtain this from your employer to allow you to manually input this information.
- Medical and retirement annuity tax info: SARS has administered a major improvement with regards to the taxpayer’s medical aid and retirement annuity tax information. This information is now prepopulated, as received from financial institutions – saving the taxpayer time in preparing the 2018 tax return. However, the onus is on the taxpayer to ensure this is correct; please verify before just accepting the SARS information. Where there are mistakes, this is probably not a SARS error, but may be incorrect information sent through from a financial institution.
- Get professional help: We have no doubt that SARS will even more vigorously enforce compliance this year. Where you are a high-risk taxpayer, including foreigners working in South Africa, South African working abroad; having large capital gains, income from rental properties or from a trust; as a rule of thumb engage an experienced tax practitioner to assist with the tax filing.
- Check for audits: Before you submit your tax return, check with the tax calculation function on SARS e-filing, that there are no amounts due. Where there are tax amounts due, interest or penalties will often be charged when these amounts should have been settled on a provisional tax basis. An experienced tax practitioner will not only be able to assist with any possible mitigation, but also confirm the instances where there are no penalties and interest.
- Pay now, argue later: Where you disagree with SARS’ tax assessment, always bear in mind the pay-now-argue-later principle. You must ask for a suspension of payment, as commencing a dispute with SARS does not stop the obligation to settle the amount SARS computed as due. Also, in following the dispute resolution rules, it is best to ask SARS for “reasons” before simply lodging an objection. In more complex or higher value cases, engage a tax practitioner earlier on, and ideally, an admitted attorney specialising in tax, to avoid premature forfeiture of your claim and ensuring client privilege.
If the above advice is used as needed, taxpayers should be able to rest assured of a tax season that is relatively hassle free.