Article by Dehan Kriel
Who pays tax?
Personal tax is compulsory for anyone who receives money from an employer or other form of income and who has the following deductions:
Medical Aid,
Retirement Annuity, and,
Tax-Free and standard investments.
The current tax season for regular taxpayers was shorter, spanning from 1 July 2022 to 24 October 2022. Provisional taxpayers must still complete and submit their returns between 1 July 2022 and 23 January 2023.
Tax thresholds
In order for you to establish whether or not you need to file a tax return, it is essential to understand the different tax thresholds and what constitutes taxable income.
The tax threshold for the 2022 assessment year for regular taxpayers gets calculated as follows:
Under the age of 65: R87 300 Over the age of 65: R135 150 Over 75: R151 100
However, if you earn less than R500 000 from a single employer, have no other sources of income, and do not claim any deductions for business expenses, you do not have to submit a tax return.
Auto-assessments
SARS will again be auto-assessing many taxpayers, and it is vital to understand how this process works and the associated deadlines. To perform the auto-assessment, SARS will gather information from third parties, like employers, financial institutions, retirement fund administrators and medical aid schemes. SARS will use this information to prepare an automatic tax return on your behalf. You will receive this notification via SMS at the beginning of the tax season.
Previously, taxpayers had to either 'accept' the auto-assessment or 'reject' it by editing the return. This year is different. If you are happy with your auto-assessment, you do not have to do anything.
If unsatisfied with your auto-assessment, you can access your tax return online, make changes, and resubmit it. However, it is essential to note that taxpayers only have 40 days from the date of assessment to reject the auto-assessment; this means time is of the essence.
Penalties
SARS has become a lot more stringent regarding penalties for late submissions based on taxpayers' taxable income. Penalties can range from R250 per month to more than R16 000 per month for every month the taxpayer is non-compliant and can continue to get charged for up to 35 months.
Avoid being complacent and quietly accepting the auto-assessment, as SARS may not have all your information which can result in you paying more tax than is necessary or possibly missing out on a well-deserved rebate.
Documentation
Your employer provides your IRP5 and IT3(a) certificates regarding your salary, which has been paid or has become payable.
An IRP5 discloses the total salary earned for the assessment year and the employees' complete tax deducted or withheld.
An IT3(a) shows an employee's salary from which there have been no tax deductions.
If you have any investments, you may also require an IT3(b) certificate, which your investment provider provides, summarising any local or foreign interest and dividends earned.
If you have disposed of any investments during the tax year, you will need an IT3(c) summarising the disposals you have made relating to investments.
An IT3(s) certificate is issued to a taxpayer by a bank or financial services institution with information related to a tax-free savings account.
The ideal tax-saving structure
Because most of our clients are property investors, we have many clients asking questions about properties that received rental income in their personal capacity, causing them to pay a lot of personal tax with all the profits that form part of the taxable income.
The Wealth Masters System will be the best solution to protect properties in a TTS Trust Structure.
Our team will assist you with all the necessary answers and will divide the taxable income in the Trust amongst the beneficiaries and the minor child to the maximum of R 91 425.00 per annum for the 2023 tax year, which can save you a great deal of unnecessary taxes.
Suppose you are concerned about the cost of transferring a property into a Trust. In that case, we already have the solutions in place by using an ALA agreement and the Usufruct agreement. Our in-house legal team will assist you effortlessly throughout the entire process.
Holding your property in a Trust has many benefits, including the fact that the assets will be secured against creditors' claims because, in a Trust, the assets are set free from debt claims.
Let us help you
If you would like our team of Accounting experts to assist you with your upcoming tax submissions and to ensure you get the maximum benefit from your returns, then contact us at services@wealthmastersclub.com.
Depending on your needs, the Destinata Accounting services for personal tax submissions begin from just R550.
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