SARS has provided eFiling as a tool to all taxpayers to use for convenience, and ease of filing one’s tax returns. While this is incredibly useful, and direct; navigating through eFiling can introduce some struggles and confusion to the layman taxpayer.
Identifying what needs to be filed, what can be deducted as an expense, and how to comply with the most up-to-date legalities and tax laws can be overwhelming for any taxpayer.
As tax professionals who deal with the jargon of SARS daily, we have identified some of the below factors that our clients found difficult to deal with, before seeking the advice and service of a tax practitioner.
Complexity of Tax Laws & Changes in Tax Legislations
South Africa’s tax laws are ever-changing and can be complex for individuals who are not familiar with the tax system. Understanding various deductions, exemptions, and tax credits can be challenging. Regulations can also change frequently, which may affect tax filing requirements and obligations. Staying informed about changes in tax legislation can help taxpayers ensure compliance and optimise their tax situation.
Tax Compliance
Ensuring compliance with all tax laws and regulations is essential to avoid penalties and potential legal issues. Taxpayers must accurately report all income and assets and disclose any offshore income or assets as required by law. Some more factors that need to be considered when filing include:
- Business income (anything extra received other than salary)
- Selling of property
- Rental income
- Foreign income
- Married in community of property
eFiling Challenges
While the South African Revenue Service (SARS) offers an eFiling system for submitting tax returns, some taxpayers struggle to access their profile due to forgotten logins etc. Should this occur, they would need to either phone SARS, or visit their nearest branch to file. A taxpayer may also experience possible technical glitches or difficulty navigating the system. The system itself can be daunting, and if used incorrectly, can have detrimental effects on the tax payable.
Outstanding Returns
Receiving notices from SARS regarding outstanding issues such as returns can often be unclear; and may cause confusion in which returns may be outstanding. Filing the incorrect return could result in admin penalties, or interest charges.
Tax Deadlines
Taxpayers need to be aware of the specific deadlines and ensure that they submit their returns on time. There are different deadlines for those submitting Provisional tax returns, and those only filing Income tax returns. Some South Africans may also be unsure of the tax period’s start and end date, and not file for the correct tax year.
Tax Optimisation
Identifying all eligible deductions and credits can be challenging for taxpayers. Maximizing deductions and credits requires careful attention to detail and knowledge of tax laws. Some factors to consider when filing include:
- Medical expenses
- Retirement annuities
- Other relevant expenses
Knowing Your Tax Residency Status
Many South Africans who have emigrated, could be unaware that SARS may still see you as a tax resident, requesting you to file your tax returns. It’s best to check on one’s eFiling profile, or confirm with SARS directly if your tax residency still lies with SA.
Documentation Requirements
Taxpayers need to gather and organize various documents such as IRP5s, investment statements, medical aid certificates, and proof of deductions. These documents act as a support of context; and show proof of accuracy for the submitted return. Should SARS request a verification once your return has been filed, your documentation will be vital in ensuring the relevant deductions are accounted for, as well as offering a foundation for any possible rebates.
Takeaways
Navigating the South African tax system presents a myriad of challenges for individual taxpayers. From understanding complex tax laws and staying abreast of legislative changes to grappling with eFiling glitches and documentation requirements, the process can be overwhelming. Proactive planning, attention to detail, and seeking professional assistance can help individuals navigate the process effectively and ensure compliance with tax laws.
If you would like to know more about your tax returns, you are welcome to book a call. Check out our Google Reviews to see what other customers have experienced when working with us or email us at info@chconsulting.co.za if you have any questions.