Four times you should file a tax return even if you don't have to
There has been a lot written lately about the South African Revenue Service (Sars) increasing the threshold for individuals who do not have to submit a tax return. The general rule is that you do not have to submit a tax return if your income from your employer is under R500,000.
However, please note that even if your income is under R500,000 there are still many other factors that would oblige you to file a tax return. For example, if you have changed jobs during the tax year, and thus have two IRP5s, you need to submit a tax return.
An IRP5 is the document that your employer provides to you and to Sars, showing your employment income for the tax year.
The aim of this article is to show you when it is a good idea to submit your tax return even when you don't need to. Submitting in these circumstances could result in you possibly receiving a refund from Sars - though whether you receive a refund or not will always depend on your circumstances.
If you did not work for the entire tax year
The tax year for an individual runs from March 1 to the end of February of the next year. You may be in a situation where you only worked for a portion of the tax year - in other words, you did not have a job for every month in the tax year. In such a situation you probably overpaid in the months you were working, as your employer would have taxed you in these months on the assumption that you were working for the full tax year.
When you submit your tax return, Sars will calculate whether you have overpaid. If you have, you may get a refund of the amount overpaid.
If you contributed to a medical scheme
If you contribute to a registered medical scheme, you can reduce your tax liability. If you as an individual contributed to a medical scheme, you can reduce your monthly tax liability by R310. You are entitled to reduce your monthly tax liability by R310 for the first dependant and R209 for each additional dependant.
If you paid the medical scheme directly from your bank account (that is, it did not go through your pay slip) you can significantly reduce your tax liability when you file your tax return. For example, if you contribute to a medical scheme for yourself and your spouse, you can reduce your tax liability for the tax year by R7,440. If your tax was paid correctly by your employer and you don't owe Sars tax on any other income for the tax year, you could receive a refund from Sars in the amount of R7,440. You must ensure you obtain a certificate from your medical aid scheme to provide to Sars to verify your medical scheme contributions.
If you contributed to a retirement annuity
If you contributed to a retirement annuity during the tax year (which did not go through your pay slip) you can significantly reduce your tax liability when filing your tax return. For example, if you earned R500,000 in the tax year and contributed R50,000 to a retirement annuity, you can reduce your tax liability for the year by R18,000. This can be done by submitting the details of the retirement annuity on your tax return.
This R18,000 reduction in tax liability may come in the form of a refund if all your tax was paid correctly by your employer and you don't owe Sars tax on any other income. You must ensure you receive a certificate from your retirement annuity provider to verify to Sars the amount contributed to your retirement annuity.
If you received a travel allowance from your employer
If your employer pays you a monthly travel allowance as opposed to your employer reimbursing you for actual kilometres travelled, you may be able to reduce your tax liability by submitting details of your travel on your tax return and submitting a logbook that complies with Sars requirements.
When your employer includes your travel allowance as part of your monthly remuneration, they will probably tax you on 80% of that allowance (the presumption is that you have travelled 80% for personal and 20% for business - you don't pay tax on your business travel). However, if you can prove to Sars (by means of a logbook) that you travelled more than 20% for business, you can reduce your tax liability upon submission of your tax return and logbook.
Please note that if you have received a travel allowance from your employer, you are obliged to submit a tax return.
• Baines is the author of How to Get a Sars Refund and a tax consultant at Mazars