2011 Tax Season

The 2011 tax season for individuals opened on the 1st of July 2011.

The big question is: When do you become liable for tax? You become liable for payment of income tax as soon as your taxable income [excluding any retirement fund lump sums] exceed R54 200 if you are under the age of 65, and R84 200 if you are over the age of 65.

It is important to note that if your taxable income falls below these limits, it does not necessary mean that you don't have to submit a tax return. Every year SARS publishes a notice in the Government Gazette specifying who is required to submit a tax return.

The steps in calculating the tax liability of a natural person are:

Determine Gross Income [inclusive of Capital Gain where applicable]
Less Exemptions = Income
Less Deductions = Taxable Income
Apply normal tax rates = Tax per scale
Less rebates = Tax payable

The most common tax certificates and information required by SARS relates to the following:

• Gross Income [could include income of spouse in certain circumstance]
• Trade Income : Business/Rental income and expenditure
• Allowances and Fringe Benefits
• Foreign and Domestic Dividends and Income
• Travel Expenses
• Pension and Retirement Fund Contributions
• Medical Expenses
• Income protection Contributions
• Donations to any non-profit organisations
• Capital gains from sale of assets e.g. property, shares, unit trusts

In closing I leave you with the following quote by Lord Thomas R. Duwar:
"The only thing that hurts more than paying an income tax is not having to pay any income tax."