Jandré Brink and Corme de Bruyn – Managers, Tax and Advisory from Hobbs Sinclair answer all your tax questions.
What is tax?
Tax is a compulsory financial charge / contribution on persons whereby funds are paid to the State for its administration and the benefits it provides to its citizens and residents.
Who gets taxed?
Practically all SA residents are taxed, whether directly (e.g. Income Tax / PAYE / Corporate Tax etc.) or indirectly (e.g. Value-Added Tax, VAT, Dividends Withholding Tax)
Who is liable to pay service tax?
All residents of the State who purchase goods or services that have VAT levied on it.
Is there a fair amount that one should get taxed?
Every person ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State.
What happens if I don’t pay my tax?
Penalties and interest will be charged by SARS. If the amount is outstanding for a lengthy period of time SARS might institute third party action, and subsequently legal action.
Where does my tax money go to?
SARS collects tax revenue from you and then together with Treasury, allocates it to the various state departments (e.g. Dept of Health) in accordance with the Minister of Finance’s National Budget Allocation.
How is my tax calculated?
Tax is calculated in accordance with the stipulations of the Income Tax Act. These may include fixed rate taxes or taxes calculated on a sliding scale.
What is needed to submit?
Individual and Companies need to retain documentary proof of all income and tax deductible expenditure during a year of assessment in order to accurately disclose their tax liability to the Receiver.
For Individuals these might include, but are not limited to:
- Employment remuneration & deductions (IRP5)
- Sole proprietors – schedules of income and tax deductible expenditure (not of a capital nature)
- Medical Aid Certificates
- Bank / Financial Institution Certificates (Interest, Dividends, Capital Gains)
- Retirement Certificates (Pension, Provident, Retirement Annuity)
- Travel Logbooks
- Schedules of personal assets and liabilities (e.g. House, Furniture/ Paintings, Motor Vehicle, Mortgage Bonds, Bank / Credit Card Balances)
Do you need petrol and clothing receipts etc. when submitting?
The onus of proof is on the taxpayer when submitting a declaration to SARS. Therefore the taxpayer needs to retain all records used to submit his/her tax liability to SARS to substantiate any claims he / she has made.
E.g. when claiming business travel deductions you will need to retain a travel logbook and proof of any actual expenditure in relation to such travel.
What happens if I don’t submit?
If you were liable to submit a return to SARS and failed to do so; when the Receiver finds out about the taxpayer’s non-compliance, penalties and interest will be charged.
Can SARS hand me over to lawyers for owing them? if so, what kind I do in this situation?
It is in SARS’ power to proceed with any legal action it deems fit if all other avenues of dispute resolution have been exhausted. In such a situation it is advisable to consult your tax and/or legal representative.
Why does SARS have to refund me when I submit my tax claims?
If you overpaid your taxes during the year of assessment SARS will refund you this amount upon assessment of your income tax return. This might happen when you have paid PAYE on your monthly income and then at year-end you submit this together with additional tax deductions (e.g. Medical Aid Contributions) resulting in a reduced tax liability and consequent refund of taxes overpaid to SARS.