Tax return relief does not mean tax relief, Sars clarifies
The increased threshold announced this week determines whether or not you need to file a tax return, not an increase in the amount of tax-free income you enjoy
The SA Revenue Service’s (Sars’s) announcement this week that many people who earn less than R500,000 a year do not need to file a tax return has been widely misconstrued by taxpayers who think they are off the hook for tax.
This is not the case – just because you meet the criteria to be free of filing a tax return does not mean you do not need to pay tax, Sars said in media statement on Thursday.
The circumstances under which you do not need to file a tax return are very specific and the threshold of R500,000 is not the only condition you have to meet, Sars stresses.
The filing threshold of R500 000 is not the same as the tax threshold used to calculate your tax liability. Every South African under 65, who earns more than R79,000 a year must pay tax for the 2020 tax year.
Who doesn't need to file a return
If you meet ALL of the following criteria, you need NOT submit a tax return. This does not mean you won’t be liable for tax on the income you earn above the tax threshold. It just means your tax has probably been fully deducted by your employer or pension provider:
• Your total employment income for the year before tax is not more than R500 000 (up from R350 000).
• You only receive employment income from one employer for the full tax year. If you changed jobs during the tax year, you must still file a return.
• You do not receive a car or travel allowance, a company car fringe benefit which is considered additional income by Sars.
• You do not have any other form of income, such as interest from investments, rental income, or receive extra money from a side business such as selling cakes or Tupperware.
• You don’t have any additional allowable tax-related deductions to claim such as medical expenses, retirement annuity contributions and travel expenses.
• Your employer has deducted tax (Pay As You Earn) from your salary each month. Employers pay the tax deducted over to SARS on your behalf.
SARS has announced that to reduce unnecessary trips to SARS branches, taxpayers who are not required to file a return will receive a simulated tax calculation from SARS as if they had filed a return. The taxpayer can accept this outcome, or update their return and then file it.
However, most salaried taxpayers have already paid tax through Pay As You Earn (PAYE) that is deducted off their salary by an employer who then pays the money to Sars. If you are an employee who works for one employer and earn below R500,000, you may be one of those who has paid all the tax you owe and have no need to file a return for the 2020 tax year – that is if for the period from March 1 2019 to February 28 2020.
But if you earn below R500,000 in this 2020 tax year, you may still need to file a tax return if you need to declare any additional income to Sars that you employer would not know about.
This may include interest income, income from a side business or weekend job, rental income and so on.
You may also want to submit a tax return if you want to claim tax deductions available to you for medical expenses not covered by your medical scheme, retirement annuity contributions that were not deducted by your employer and work-related travel expenses.
Sars will reconcile what your employer paid over with what you declare in your tax return. This will result in a tax calculation called an assessment. Your assessment will show whether you need to pay additional tax to Sars, whether it owes you a refund or whether you are square with the taxman.
Earlier this week, Sars commissioner, Edward Kieswetter, said Sars had introduced several measures this tax filing season to encourage you to declare your income and to make it easier for you to fill in and submit your tax return.
New measures include enhancements to the eFiling service, which is available online, and the revamp of the Sars MobiApp, which will allow for the filing of simple tax returns.
Taxpayers will see a revamped income tax return form on the eFiling site, enjoy beefed up technology, which will eliminate issues with browser compatibility and experience simplified log in and password resetting changes.
Important dates for 2018/2019 Tax Season
Electronic filing via eFiling and cellphone (MobiApp): July 1 to December 4 2019
Branch filing: 1 August 1 to October 31 2019
Provisional taxpayers who file via eFiling: July 1 2019 to January 31 2020
The revamped MobiApp will make it even easier than before to use a smartphone to file a simple income tax return because of new and convenient features such as simpler navigation, biometric authentication, the ability to reset your username and password, and it now allows for the scanning and uploading of supporting documents, he says.
One-time PINs have been added to address any security concerns that taxpayers might have, Kieswetter said.
Taxpayers who are registered for eFiling, or have access to the MobiApp, can file their income tax returns from July 1 via these channels and if you need help with the processes you can visit a branch from August 1 where officials will help you file electronically.