Tax Matters

Dealing with your personal tax affairs is an essential task, which can be fraught with the complexities of ever-changing tax regulations. Hopefully this process will become less complex as a result of initiatives such as the SARS e-filing.

The deadline for tax returns this year is 31 October, unless you have received an extension.

You are required to submit a tax return when:

• You earn a salary of more than R60 000 a year
• You earn commission or have a car allowance, even if your income is less than R60 000
• You receive interest and foreign dividends of more than R16 500, or R24 500 if you are older than 65
• You own a business
• You have received a tax return form, regardless of your income
• You have worked for less than a full year, tax is deducted from your income as if you were employed for the full 12 months, but you can claim a rebate on the extra tax payment

Tax Return Categories

• IT12S - a standard income tax return to be completed by the majority of individual taxpayers who earn a salary with basic allowances
• IT12C - a comprehensive income tax return to be completed by individual taxpayers who have additional income and deductions such as business or rental income, farming operations, capital gains/losses and foreign income

Completing your tax return

• Check that your personal and banking details are correct and don’t forget your signature!
• A Statement of Assets & Liabilities is required by anybody who is a director of a company or a member of a close corporation or if you receive income from trading, professional or farming activities

Your income

• You will need an IRP5 certificate from your employer
• You will need to fill in the industry in which you work, choosing one of the options SARS provides eg if you are a teacher, for example, you would indicate “educational services”
• Write down the name of your employer and the period you worked there - the same as the period stated on the IRP5. If you changed jobs during the year, you would write down each employer’s details separately
• Copy the information from your IRP5 into this section of your tax return, including - very importantly - your taxable income
• Your IRP5 should indicate how much tax you have paid already and you should copy this information into the relevant section of your return
• If you received income other than from your employer, such as interest on savings, share dividends and rent, you need to declare this on your return

Capital gains tax?

• Capital gains tax is a levy on a transaction on which you made a capital gain. This is the difference between the price you paid (base cost as at 1 October 2001 and thereafter) for an asset and the price you sold it for
• CGT personal exemption is R15 000
• CGT exemption for foreign shares and interest is R 3 000
• If you are selling your home, you can make a profit of R1.5-million before you need to pay capital gains tax. This applies only to your primary residence. If you have a flat for investment purposes or a holiday home and you sell either of these there would be no tax exclusion

Deductions:

Retirement Tax

• While you are working, you can save up to 15% of your income tax-free through a pension or provident fund or through a retirement annuity.

Using your travel allowance

• You are able to claim a portion of your travel allowance for tax purposes. Even if you do not keep a logbook of your car’s mileage, you need to have odometer readings for the start and end of the tax year
• If you haven’t kept records of your mileage, the first 18 000km you traveled in the year will be deemed to be for private purposes. Only once you have reached this threshold will you be able to claim business mileage, up to a maximum of 14 000km a year
• Keeping a logbook is worth the hassle because you can claim all your business mileage. Get in the habit of taking an odometer reading every morning before you leave for work and before you take any other trips during the day
• You should keep records of any repairs or maintenance you carried out on the car and your proof of purchase of the car

Medical expenses

• If medical expenses for you, your spouse and your dependant children make up more than 7.5% of your taxable income, you are allowed to claim this amount as a medical allowance
• This amount applies only to expenses not covered by your medical scheme. If you are older than 65 or you or your child has a disability, there is no limitation
• The sum of R530 each can be deducted for the principal member and first dependant of a registered medical aid scheme and R320 each for additional dependants. Sometimes you can claim the full amount for contributions paid to a medical scheme, for example, if you or one of your dependants are disabled

Income Protection

• 100% tax deduction for this benefit. The Income Continuation Benefit pays you a regular income if you experience a loss of income on becoming partially or fully unable to follow your nominated occupation

Donations Tax

• A person can make a donation of up to R100 000 per annum free of donations tax

Getting help with your tax return
If completing your tax return still seems a bit too much - contact our accountants at Ross Munro and Associates. We recently formed a partnership with Ross and his team to extend our service offering to you and they are specifically qualified to assist you in this regard.

If you have any queries regarding the above commentary please contact us on 021 683 3380 or info@silke.co.za. Silke Financial Services has the skill and expertise to advise you, appropriate to your financial situation.