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What To Consider When Filing Your 2021 Tax Return

Not everyone will need to submit a tax return this year.

“This is because, in line with what happened last year, SARS will be auto-assessing about 3 million taxpayers, which is about half of the six million taxpayers who do need to submit tax returns,” explains Liezl Alberts, tax specialist at Allan Gray.

She says that this year SARS will continue with what it did last year (auto assessments) in response to the COVID-19 pandemic and the need to reduce physical contact at its branches.

What does auto-assessment involve?

SARS uses certain information that it receives from third-party data providers, such as employers, medical-aid providers and investment managers, to pre-populate tax returns for those selected for auto-assessment.

“The benefit of doing it this way is that it takes all the pain and hassle away,” asserts Alberts.

Taxpayers who’ve been auto-assessed will receive an SMS from SARS with a link to the efiling website or mobi app.

“If you’re happy with the information contained in the auto-assessment, you can accept it and SARS will submit your tax return on your behalf and issue you with a notice of assessment,” Alberts explains.

But she cautions that investors should check that all the information captured on their tax return is accurate:

“It’s vital that you make sure that there is a 100% correlation between the information provided by a third-party provider and the pre-populated information, otherwise there may be consequences.”

What happens if you ignore the SMS from SARS?

If you don’t respond to the auto-assessment notification on or before the deadline of 23 November, SARS will automatically submit your tax return on your behalf. Again, Alberts warns investors to take action rather than allow this to happen.

“If you ignore the request, SARS will make an estimate assessment based on the data at their disposal and then you could miss out on allowable deduction or even worse, end up having to pay more tax than necessary,” she says.

Possible additional income to report or deductions to claim include gains made from the sale of a property, rental income, medical expenses not covered by your medical aid or a tax deduction from home-office expenses.

How do you know whether you need to file a tax return or not?

Not all taxpayers need to file a tax return. “As an individual, you’re only liable to pay tax if you received taxable income which is more than a specific amount (known as tax thresholds) for the tax year,” explains Alberts.

The tax thresholds for the 2021 tax year are:

· R83 100 for individuals younger than 65

· R128 650 for individuals 65 or older, but younger than 75

· R143 850 for individuals 75 or older.

“Everyone seems to remember that if you receive a salary of less than R500 000 per year, you don’t need to submit a tax return, but what they forget is that this applies only if you have one employer.”

If you have more than one source of income or if you’ve changed jobs in the middle of the tax year, you’ll still need to submit a tax return.

Alberts believes that the golden rule is: When in doubt, submit.

“If you’re uncertain, rather submit a tax return. One good reason is to keep a good track record with SARS. Also, if you’re a member of a retirement fund, it’s important that there’s an accurate record of your retirement fund contributions so that when you withdraw the funds and SARS has to perform the required tax calculation, any excess contribution can be claimed as a tax-free benefit.”

What are the deadlines for submitting your tax return?

The deadline for non-provisional taxpayers is 23 November, while provisional taxpayers need to submit their returns by 31 January. But Alberts urges taxpayers to submit earlier than this.

“The closer we get to the deadline, the more congested the e-filing system gets, so if you’re ready and you’re happy with the pre-populated data and how it compares with your tax certificate, submit your tax return, so you don’t have to worry about it again.”