TAX SEASON

Are you prepared?

TAX RETURN SERVICES

Should You Submit a Return This Tax Season?

The 2022/23 Tax season is upon us and there is not better time to ensure that your tax affairs are in order.

The South African Revenue Services (SARS) confirmed that the filing date will be 1 July 2022 to 24 October 2022 and registered provisional, Individual taxpayers, who file via the E-filing portal, 1 July 2022 – to 23 January 2023.

At Tax Consulting South Africa, we offer a holistic and effective service in the calculation and filing of your individual income tax return, provisional income tax returns and any individual tax-related issues; thus, providing an end-to-end solution.

NORMAL TAXPAYER – SOUTH AFRICANS WORKING LOCALLY

This category often comprises of taxpayers who are employed by one employer, who withholds monthly pay as you earn. Other communal items that may form part of their tax return will be medical aid, retirement annuity and travel allowance claims.

To ensure full compliance, such taxpayers will also need to register for income tax, and timeously submit income tax returns to avoid penalties and interest.

PROVISIONAL TAXPAYER

Provisional tax is a preliminary bi-annual tax submission, which seeks to relieve the cash flow burden of an annual tax debt.

Any person who conducts a trade or earns additional income, who is not subject to any withholding tax, must register as a provisional taxpayer.

It is not uncommon for SARS to “automatically” register people as provisional taxpayers. They are legally permitted to do so where the person should have registered themselves and failed to do so.

SOUTH AFRICAN WORKING ABROAD

Some expats are under the false impression that if they leave South Africa, they are not required to declare their foreign income to SARS, or that they no longer need to submit tax returns in SA.

If you are a South African working abroad, you are legally required to submit tax returns to SARS every year, declare your worldwide income, and potentially claim an exemption on your foreign earnings.

Where applicable, expats can claim an exemption on their foreign earnings under section 10(1)(0)(ii). There are specific criteria to be met to qualify for this exemption. It is important to note that even if you qualify for an exemption, you are obligated to submit a return to SARS.

FOREIGN NATIONALS IN SOUTH AFRICA

Foreign nationals working in South Africa are subject to normal tax on income earned from a South African source (services rendered in South Africa).

How their employment contract and packages are structured will affect how they are taxed by SARS. It is vital that these are carefully structured from a tax perspective.

Foreign nationals also need to ascertain their tax residency status in South Africa. Dependent on their circumstances they might have become a tax resident. They need to remain cognizant of the physical presence test and the ordinarily residence test.

As a non-resident, they will be taxed only on South African sourced income. As a tax resident, they will be taxed on worldwide income, not just South African income

PROCESS AND COSTING

Our team follows a set process in dealing with returns. This allows us to submit your returns effectively and accurately the first time.

Initial review: We conduct a comprehensive review (which includes transferring your tax profile onto ours) for first-time accurate tax planning and compliance.

Below is the information required to initiate the process:

Full name and surname
ID/Passport number
Tax number
Banking details
Residential address
Telephone numbers

Our fees vary depending on the complexity of the return.

Standard tax return: (i.e., includes an IRP5 certificate, medical tax certificate and/or retirement annuity tax certificate declaration).

Complex return: Where in addition to the standard tax return, a declaration requires the inclusion of either an IT3(c) certificate – capital gain event, rental property, consulting/trading income and/or the disposal of property attracting CGT.

Expatriate or non-resident tax return: For non-resident taxpayers working in South Africa. Or, for South African expatriates working outside South Africa as contractors or employees claiming section 10(1)(o)(ii).

FREQUENTLY ASKED QUESTIONS

INDIVIDUAL TAX

When does tax filing season open?

This is annually announced by SARS but normally the South African Tax filing seasons opens 1 July, per tax year, for all individual taxpayers.

However, a significant number of individual taxpayers will be auto assessed starting from 1 July 2022. These taxpayers will have an opportunity to manually file their returns should they not agree to the auto-assessment.

When does tax filing season close?

Non-provisional Taxpayers will have up to 24 October 2022 to submit their tax returns, whether online or at a SARS branch (by appointment only).

The deadline for electronic filing for provisional taxpayers is extended to 23 January 2023.

What documents do I need to prepare a standard tax return?

IRP5 employee tax certificate;
IT3(b) and (c) certificates from financial institutions in respect of interest, dividends and capital gains;
Retirement annuity fund or pension fund contribution certificate:
Medical Aid certificate of contributions; and
Travel logbook (related to travel allowances received)

Further to the above, any additional income received by the taxpayer during the tax period must be declared on the return.

Since the threshold for submitting tax returns is R500 000, am I required to submit a return even though I earn below the threshold?

You are not required to file a tax return if your income for the tax year is not above the R500 000 threshold, and you meet the following requirements:

Your remuneration is paid from one employer;
You have no car or travel allowance, a company car fringe benefit, which is considered as additional income;
Your employee tax (PAYE) has been deducted or withheld; and
You did not earn any other additional income such as rentals, dividends, interest, etc.not earn any other additional income such as rentals, dividends, interest, etc.

What are the odds that SARS suddenly flags all the old tax returns as outstanding, when previously they never reflected as outstanding?

The odds are high for tax returns to be flagged by SARS for periods where taxpayers are required to submit a return and a return was not submitted, i.e., periods where the taxpayer did not meet all the requirements of the threshold.

How long does SARS take to process a refund?

SARS takes between 7-21 business days to process a refund to verified South African banking accounts.

EXPATRIATE TAX

How do I know if I am a resident or non-resident when submitting my returns?

A taxpayer’s residency status is determined using the residency tests outlined in our Income Tax Act, being the ordinarily residence test and the physical presence test.
A taxpayer’s circumstances and history will have to be assessed, preferably by a tax professional against the criteria, to determine the residency status of the taxpayer and how they will submit their returns to SARS. This must be reviewed on an annual basis.

RESIDENTS

As a South African resident working abroad, do I have to pay taxes in South Africa with regards to foreign income?

South African tax residents are taxed on their worldwide income and as such, foreign income earned (including fringe benefits and bonuses) by a South African tax resident must be declared to SARS for tax purposes. We offer a potential expatriate tax calculation service to help SA tax residents determine their potential tax liability.

If I’m working for a South African company, do I qualify for foreign income exemption when rendering my services outside the Republic?

Yes, South African tax residents working for South African employers do qualify for foreign income exemption if they render their services outside the Republic. Please note that the Section 10(1)(o)(ii) exemption is now capped at R1.25 million.

If I’m below the R1.25 million threshold, do I still need to declare my foreign income even though it is fully exempt?

Yes, to benefit from the exemption you are still obligated to declare your foreign employment income and thereafter claim the exemption accordingly.

If I do not qualify for s10(1)(o)(ii) exemption and I have already paid taxes on that income abroad, will I have to pay taxes twice?

Yes, even though you have paid taxes abroad in respect of your income earned, your income must still be declared to SARS and be subject to South African tax. It is important to note that taxpayers who are subject to double taxation may take advantage of the available South African tax treaties to avoid double taxation. This process also needs to be declared and submitted to SARS.

NON-RESIDENTS

Must I have earned South African sourced income to submit a tax return?

Non-residents with active tax reference numbers will still be required to submit a tax return even where they have not earned South African sourced income. Such a return will be a zero return. The obligation to submit a return will fall away where you have no South African sourced income and have deregistered your tax number. (You may only deregister once you dispose of all your assets in South Africa such as bank accounts, properties, trusts, shares, and policies).

How do I eliminate double taxation on income earned in South Africa?

Where there is a double taxation agreement signed between South Africa and the State in which you are a tax resident, the double taxation agreement will determine which country has taxing rights in respect of the relevant income earned. Where both South Africa and the State in which you are a tax resident have taxing rights, you will need to claim foreign tax credits from that State in respect of the taxes already paid in South Africa.

I’m a non-resident who ceased working in South Africa and now earn a pension and annuity income from a South African pension fund. Where do I pay the taxes relating to the income I’m receiving?

The double taxation agreement between South Africa and the State in which you are a tax resident will ascertain which country has taxing rights in respect of such income. Where the double taxation agreement is silent on the matter or there is no double taxation agreement between the two countries, you would need to claim foreign tax credits in respect of the taxes already paid in South Africa in the State in which you are a tax resident.

Do I need a South African bank account when claiming my refunds?

It is much quicker for SARS to verify and process refunds to a South African account than for a foreign bank account.

CRYPTO TAX RETURNS

When do I pay tax on my crypto?

You pay taxes when you:

Sell crypto for fiat
Swop one coin for another
Receive rewards, airdrop, interest, etc.

At what rate am I going to pay tax?

The rate at which you pay taxes on crypto depends on whether you are a trader or an investor.

If you are a trader, your profits will be added to your taxable income, and you will be taxed according to your tax bracket.
If you are an investor, you will be paying an effective 18% on gains.

Can I send crypto from South Africa to another country?

You are currently not permitted to send crypto outside of South Africa. You may, however, purchase crypto abroad via credit or debit card and send this back to South Africa.

Please note that you only have a R1mil yearly allowance to buy crypto abroad without any approval from the SARB/SARS. If you spend more than this allowance, seek approval first.

What happens if my crypto got stolen?

We can claim the cost of that specific crypto as a deduction if adequate proof has been obtained for the stolen crypto.

When do I have to file my crypto tax?

Your crypto taxes will also have to be filled on the following dates:

In your yearly tax submission that is due to open on 1 July 2022.

If you are registered provisional taxpayer, you will also have to file in August and February of every year.

LEARN MORE ABOUT CRYPTO TAXES

TAX SEASON 2022 DEADLINES

TYPE OF TAXPAYER	CHANNEL
Non-Provisional and provisional taxpayers	Manually at a SARS Branch (appointment basis)

TYPE OF TAXPAYER	CHANNEL
Non-provisional taxpayers	File electronically

TYPE OF TAXPAYER	CHANNEL
Provisional taxpayers	File electronically

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