Tax season is upon us with eFiling income tax returns due for non-provisional taxpayers on 22 November 2013 and provisional taxpayers by 31 January 2014. Recently, SARS has codified penalties for things such as late submissions or understatements of income. More information flows to SARS from third parties about income you have earned – just look at how your tax return is already populated by retirement funding and your IRP5 information, for example. As SARS are under pressure to maximise collections, you can expect more queries on your tax return. In view of the additional information SARS has and the potential penalties you could pay, it is necessary to approach your return in a new light. What you should do
- Plan your return. Familiarise yourself with the transactions which flowed through your bank statements. Make sure you know what you can claim and what is disallowed. Seek advice from your accountant / tax practitioner to clarify any uncertainties you may have.
- Have a filing system and document all tax deductions. Remember you are required to keep your documentation for five years. It pays to be disciplined upfront. Doing a tax return is bad enough but don’t compound it by trying to find documents when doing the return. You will probably miss potential tax deductions by not organising your documentation. Remember SARS are likely to ask for documentation.When you download your tax return, it will already be populated with information from your IRP5, interest and dividends received, and retirement contributions or retirement income received. All of the relevant institutions will have sent you copies of the data submitted to SARS – check that this is the same as the information on your tax return. Any differences should be sorted out with the relevant institution prior to submitting your return. You will also need:
- A log-book if you receive a car allowance or enjoyed the right of use of an employer-provided vehicle;
- A section 18A certificate if you made a donation to a Public Benefit Organisation (PBO). You are allowed to claim up to 10% of your taxable income for donations made to approved PBOs;
- Invoices or other relevant documentation in respect of any other claims you intend making. For example, if you run a business to earn a second income, expenses attributable to that income can be claimed if you have the necessary documentation;
- All documents of any out-of-pocket medical expenses you incurred (see 3 below).
- This is the first year of the medical rebate. Previously tax deductions were allowed. These reduced your taxable income. Rebates reduce the tax you pay.In addition, you are entitled to deduct out-of-pocket medical expenses subject to criteria laid down. It is worth seeking professional advice to ensure you maximise the deduction allowed.
- If you make use of a tax practitioner, check he/she is correctly registered with SARS.
© DotNews, 2005-2013. This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.