What is it?
Income tax is the normal tax which is paid on your taxable income.
Examples of amounts an individual may receive, and from which taxable income is determined, include the following –
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- Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits
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- Profits or losses from a business or trade
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- Income or profits arising from an individual being a beneficiary of a trust
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- Director’s fees
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- Investment income, such as interest and foreign dividends
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- Rental profit or losses
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- Income from royalties
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- Annuities
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- Pension income
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- Certain capital gains
Who is it for?
You are liable to pay income tax if you earn more than:
For the 2023 year of assessment (1 March 2022 – 28 February 2023)
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- R91 250 if you are younger than 65 years.
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- If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) is R141 250.
-
- For taxpayers aged 75 years and older, this threshold is R157 900.
Structure of Tax Computation
Gross Income (S1)
Less
Exempt Income (s10)
=
Income
Less
DEDUCTIONS (S11)
Plus
Taxable Capital Gains (S26A)
Less
Prior Year Assessed Loss (s20/20A)
TAXABLE INCOME
X
Rates of Tax (s5)
Less
Rebates S6 etc)
=
Income (Normal) Tax payable.
What steps must I take to ensure compliance?
Step 1: You must register for income tax
If you earn taxable income which is above the tax threshold (see above), you must register as a taxpayer with SARS.
The various options to register can be viewed on How do I register for tax. All additional tax type registration can be performed from eFiling without having to visit a branch again. You can register once for all different tax types using the client information system.
Step 2: You must submit a return
If you are registered for income tax, you will be required to submit an annual income tax return to SARS based on the Gazette. See the Tax Tables.
The year of assessment (commonly referred to as a “tax year”) runs from 1 March to 28 February. Every year, SARS announces its Tax Season, a period during which you are required to complete and submit your annual income tax return. The income tax return which should be completed by individuals is known as the ITR12 form.
If you don’t submit your income tax return on time, you may be liable for penalties.
How should it be submitted?
Online: The easiest and quickest way to file a tax return is online, by making use of SARS eFiling or the MobiApp. You must, however, first register for eFiling on the SARS eFiling website or using the MobiApp.
We have a page where we explain to you in detail how to register for eFiling. Once registered, you can complete the online form to create your return.
Note that you will start by completing the first page of the form which contains several questions regarding the nature of your tax affairs (referred to as a return “wizard”). Completion of this part will automatically tailor the tax return to your specific tax requirements.
In a branch: Tax returns can be submitted at a SARS branch office by making an appointment. To find your nearest branch visit our branch locator.
Auto-assessment
SARS will assess a significant number of taxpayers automatically. These will be original assessments based on an estimate, and will be based on third-party information readily available to SARS. The information may be received from multiple institutions such as banks, fund administrators, insurers, medical aid schemes and employers. An individual who receives an estimated assessment from SARS has 40 business days from the date of the assessment to submit his or her original return if he or she does not agree with the assessment raised by SARS.
An individual who is auto-assessed, will be notified by short message system (SMS) – so there will be no need for the individual to call SARS or to visit a branch. The SMS will direct the individual to eFiling or the SARS MobiApp to view the Notice of Assessment if he or she is an eFiler. If the individual is not registered for eFiling, an SMS will be sent communicating the summary of assessment results and, in addition, the comprehensive Notice of Assessment will be sent via mail.
An individual who disagrees with the estimated assessment, will be able to request SARS to make an additional or reduced assessment, by submitting an original return with relevant details within 40 business days from the date of assessment.
An individual who is unable to submit an original return within 40 business days after the assessment was made, may request an extension to file the return. SARS may extend the period to submit if SARS receives the request for extension, together with reasonable grounds for requesting the extension, before the expiry of the 40 business days.
A request for extension that is received after 40 business days from the date of the estimated assessment, may only be granted if –
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- the individual’s request is submitted to SARS within 21 business days after the expiry of the 40 business days, and outlines reasonable grounds for not requesting the extension in time; or
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- the individual’s request is submitted to SARS within three years after the expiry of the 40 business days, and outlines exceptional circumstances for not requesting an extension in time.
The period of any extension that is granted by SARS is within SARS’s discretion, but may not exceed a period of 40 business days, or the date that the original assessment prescribes, whichever is longer.
An individual who has not been auto-assessed, has not been selected to participate in the auto-assessment programme and, if required to file a return, must proceed to do so.
A business day is any day that is not a Saturday, Sunday or public holiday.
Top Tip:
When completing your return, you will require the following documentation in order to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:
- IRP5: This is the employees’ tax certificate your employer issues to you.
- Certificates you received for local interest income earned.
- Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.
- Details of medical expenses paid and medical scheme contributions made.
- The relevant certificates reflecting your retirement annuity fund contributions made.
- A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit).
- Any other documentation relating to the allowable deductions you wish to claim.
For any assistance with your tax returns please don’t hesitate to contact us – Whatsapp 082 300 7954 , Email rodney@probizserv.co.za
Serviceshttps://www.probizserv.co.za/2023/04/12/small-business-corporation-tax/
