What's new for taxpayers seeking foreign work exemptions and other claims
There have been tweaks to exemptions for work done outside SA, with more drastic changes coming
Tax return filing season opens on Sunday with some new measures for taxpayers who want to claim the tax exemption for income earned while working outside South Africa.
Marc Sevitz, a director of TaxTim which provides tax practitioner services online, says you are currently exempt from paying tax on income earned while working in a foreign country if you are physically out of South Africa for more than 183 days a year. The exemption applies regardless of whether you pay tax in the foreign country.
The biggest change to the tax return this year is that the South African Revenue Service now requires details of any income that was subject to tax in a foreign country and reflected on an IRP5 you’re your employer, Sevitz says.
But, warns Sevitz, the much-anticipated changes to the foreign employment exemption section of the Income Tax Act will take effect from March 1 2020.
From that date taxpayers will no longer have a complete exemption from paying tax on income earned when working outside SA for more than 183 days. The first R1 million earned will be tax exempt and any amounts earned above this threshold will be subject to tax in South Africa. In most circumstances, any foreign taxes paid will, as usual, be set off against taxes owing, he adds.
Tax filing season deadlines
September 22 2018: If you file a paper return.
October 31 2018: If you are a not a provisional taxpayer and efile or file electronically at a SARS branch.
January 31 2019: If you are a provisional taxpayer and eFile or file electronically at a SARS branch.
Apart from these changes, there are some further tweaks made to the 2018 tax return form.
According to Sevitz the biggest change for the 2018 tax season has been the shortening of the filing period by three weeks. In past years SARS allowed taxpayers – other than those who file provisional tax returns - from July 1 to the last Friday in November to submit their returns.
For the 2018 tax filing season, the new deadline is October 31. SARS says the earlier deadline will give it more time to process refunds and handle verifications and audits before the start of the December holiday season.
Taxpayers are always encouraged to file as early as possible anyway, Sevitz says, firstly to receive their refunds sooner rather than later and to avoid any time-consuming issues which might arise.
Sevitz says since last year SARS requires you to supply the name of the medical schemes to which you contribute and the policy numbers for retirement annuity contributions before you can enjoy a tax deduction for these expenses. In some cases, these details will already be populated in your online return if it was supplied by the medical scheme provider.
SARS also requires you to differentiate between contributions to a medical scheme of which you, as the taxpayer, are a member, and contributions to scheme of which you are not a member, but to which you contribute for someone who is financially dependent on you, such as your parents, he says.
If you or a dependant are disabled, you can claim not only your medical scheme contributions, but also your unrecouped medical expenses and expenses incurred as a result of the disability, such as the cost of a wheelchair, travel or caregiver expenses, as a tax deduction.
But to qualify as a claim, your disability must have, or be expected to, last for more than a year and must have been diagnosed by a doctor registered with the Health Professions Council of South Africa.
Sevitz says following on from the change to last year’s return, taxpayers with disability expenses are required to submit a lot more information about their disability including detail such as the practice number of the doctor who made your diagnosis.
If you are claiming a deduction for work-related travel expenses against a travel allowance paid by your employer, you must still indicate whether you have purchased the vehicle for which you incurred expenses or whether you are leasing it.
Sevitz says if you bought your vehicle, you can claim any interest paid and an annual amount for depreciation, whereas if you have leased the vehicle, only the lease payment can be claimed.
SARS announced this week this it will remove drop boxes for the submission of income tax returns and other paper documents, in its drive to encourage taxpayers to use efiling for all tax transactions where possible. Up to now drop boxes were provided in addition to the branch and electronic channels for taxpayers who chose to submit their returns and documents manually.
However, SARS will still ensure that taxpayers switching to efiling are supported and taxpayers who are not computer literate, for instance, senior citizens, will still be assisted at a special helpdesk at SARS branches, the revenue SARS media spokesperson, Janine Mqulwana, says.
As from today [1 July 2018], SARS will also no longer provide certain printed forms at its branches, including forms used to register as a taxpayer (IT77C for companies and IT77TR for trusts), as a VAT vendor (VAT101), as an employer (EMP101), as well as forms used to apply for tax directives (IRP3(a), (b), (c) and (d)).
The completion of these forms, the filing of income tax returns, payments and the uploading of supporting documents, can all be done electronically on efiling with the support of the online Help-You-eFile facility and the contact centre.
Taxpayers who have struggled to update supporting documents to efiling in the past will be pleased to learn that SARS has increased the size threshold of files that can be uploaded from two megabytes to five megabytes.
SARS eFiling is available at www.sarsefiling.co.za. On the site you will also find email addresses if you need to contact SARS or you can call the SARS Contact Centre on 0800 00 7277.