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Tax submissions: What every taxpayer should know

24 Jun 2014

Michelle SteenstraThe imminent tax season requires taxpayers to submit their tax return forms to the South African Revenue Service (SARS) between 1 July and 21 November 2014.

Missing the 21 November deadline will entitle SARS to charge non-compliance penalties for each month the return is outstanding. Should the penalty not be paid, SARS will then be able to deduct the outstanding amount from the taxpayer’s income, salary or bank account.

Knowing the basics of tax submissions will enable taxpayers to obtain the necessary information timeously, thereby making the tax submission process less daunting.

South African residents should register for income tax as soon as they receive taxable income in excess of the tax thresholds. The tax thresholds for the 2013/2014 year are as follows:

Age

Tax threshold

Below 65

R 67 111 per year

Between 65 and 75

R 104 611 per year

75 and over    

R 117 111 per year

An income tax return must declare all income earned during the tax year. A taxpayer’s salary usually represents the major part of the income that must be declared, but it is by no means the only income relevant to a tax return. The declaration must also include income such as capital gains, investments income (e.g. dividends and interest) and rental income.

Obtaining all the relevant information about the income and capital gain of one’s investments can be extremely tedious. However, it becomes much easier if taxpayers know exactly which information is required by their tax practitioners.

The product you are invested in, will determine the information you’ll need to complete your tax return. The investment house holding your investment should provide you with relevant tax certificate for the various investment products. Below is a short summary of the tax certificates that are available for each product.

Tax certificate

Description

Product

IRP5/IT3(a)

Reports all annuity income and lump sum payments

  • Living annuity
  • Pension and provident funds
  • Retirement annuity funds

IT3(b)

Reports interest and dividends for local and offshore investments

  • Unit Trusts
  • Local Investment Platforms (LISP)
  • Offshore Investment Platforms

 IT3(c)

Reports capital gains and losses for local and offshore investments

  • Unit Trusts
  • Local Investment Platforms (LISP)
  • Offshore Investment Platforms

Investment houses will distribute the above-mentioned certificates before the start of the tax season, so taxpayers can expect these certificates during May and June 2014, either via e-mail or post. Remember to safeguard these certificates until your tax return has been completed.

If you do not receive these certificates before 1 July 2014, you can contact the investment house to request the certificates. Alternatively, you can ask your financial advisor to request the statements on your behalf.

Take charge of the 2014 tax season and make sure you are aware of all the information that might affect your tax return.

For more information regarding tax returns, contact SARS directly on 0800 007 277 or visit the website at www.sars.gov.za. Alternatively, contact your financial planner or tax practitioner.  Article by Michelle Steenstra of Exceed Asset Management - 021 852 0382

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