Achievers What to know about Tax
Understanding how tax works now, will help you in years to come.
School leavers have probably heard very little about tax in South Africa other than VAT and are left to discover the complexities of the tax process and financial elements around tax for themselves.
The sooner you learn about tax, the sooner you can build confidence in the process and understand where you can benefit.
As a South African citizen, you are eligible to great tax-exempt benefits that you should take advantage of.
Anything helps when you’re a young adult entering the tough working world.
Firstly you will need to know how to register with the South African Revenue Services (Sars), how your tax is paid and how and when to file for your tax return. If you plan on working in South Africa, you’ll be obliged to pay tax on your income. If you are younger than 65, you only need to pay tax if your income is more than R78 150 per year. Be sure to check this threshold on the Sars website as this starting taxation amount changes each year.
You will need to register at your nearest Sars branch with your ID book and proof of residence where you will be given a tax number that’ll be yours for life. Your employer should deduct Pay As You Earn (PAYE) from your salary each month and pay that to Sars on your behalf.
If you have any other sources of income like rental or interest earned on investments, you will have to declare those to Sars when you do your tax return every tax year (July to November). Sars will then inform you of any additional tax you owe or refund you for eligible expenses.
It’s important to not only know why you pay tax but how to pay tax.
There are a number of different ways you can file your tax return:
- You can take the documentation listed below to your nearest Sars branch for assistance.
- You can register to pay your taxes online through the Sars e-filing system.
- Some employers provide staff support for completing tax returns.
- You can hire an accountant to do your tax returns for you.
These are the documents you’ll need to submit:
- Your IRP5/IT3 certificate, which you will receive from your employer.
- Medical aid certificates as well as details of any other medical expenses that weren’t covered by your medical aid.
- Pension and retirement annuity certificates.
- Your banking details.
- Travel logbook if you receive a travel allowance.
- Tax certificates you received in respect of investment income (IT3(b)).
- Completed confirmation of a diagnosis of disability (ITR-DD), where applicable.
- Any other documentation relating to income you received or deductions you want to claim.
As a South African citizen, you are legible to some pretty neat tax-free benefits. With a tax-free investment, you are able to invest R33 000 every year, tax-free, limited to R500 000 over your lifetime.
This is a great advantage in saving towards your retirement and the best, if not only way to get back at the ‘man’.
The concept was put in place as an incentive for South African households to save more money. You’ll have to do your own research into which financial service provider to use and what tax-free investments are out there.
For more information on everything tax, check out the Sars website.
