Taxes play an important role in keeping things running in your neighbourhood and our country.
Keeping our local roads, police force, local schools, parks, infrastructure and all kinds of services we sometimes take for granted - are all sustained with taxes. Even things like sports teams and skills development require taxes to run, without taxes our country could not function at all.
SARS
There is nothing to be afraid of when it comes to paying taxes, unless you have something to hide or are involved in illegal activities. As a regular taxpaying individual you have nothing to worry about, SARS is one of the most efficient government services. They want to make the process as simple and easy as possible.
How is tax calculated
Employees’ Tax or pay as you earn (PAYE) tax refers to the tax deducted by your employer from an employee’s salary. Using tables issued by SARS, your employer will deduct PAYE from your salary and then pay it over to SARS. Should the deductions prove to be more than required by SARS you are entitled to a refund. This is calculated when you submit your tax return and the excess is refunded into your bank account.
Who needs to pay tax
If you earn more than theses amounts then you must pay income tax:
For the 2015 year of assessment (1 March 2014 - 28 February 2015)
R70 700 if you are younger than 65 years.
If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R110 200.
For taxpayers aged 75 years and older, this threshold is R123 350.
For the 2016 year of assessment (1 March 2015 - 29 February 2016)
R73 650 if you are younger than 65 years.
If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R114 800.
For taxpayers aged 75 years and older, this threshold is R128 500.
How to register for tax
If your employer doesn't register you on your behalf then first time tax payers need to visit their closest SARS office to register. You only need to register for tax once and then update your personal details as you make your way through your earning years, if you move or details change. You'll need to complete an IT77 form and have your ID, proof of residence and proof of your banking details.
Once you have a tax number the world is your oyster. You can use it to open investment accounts, offset some of your pension contributions and other expenses. A tax number is also critical when you would like to buy property or make certain investments which require tax clearance to show that you are up-to-date with your tax.
When and how to submit a tax return
The annual Tax Season is when you will be required to submit a return. For most taxpayers this runs from July to November every year. This is how SARS calculates your tax based on the income you declare and the tax-deductible expenses you have incurred for the year of assessment. It is on this basis that a refund might be granted.
You can submit your return using your IRP5 (the document your employer will give you with the information you need to complete your tax return) via eFiling or using the SARS app.
Tax myths busted
The onus is on your employer to ensure that they deduct your taxes correctly based on your salary and they are required to follow specific guidelines for paying it over to SARS.
You will only pay tax on the money that you have earned relative to your total income for the tax year - no more and no less. There are no hidden agendas or catastrophic bills on the horizon as long as you follow SARS's simple guidelines. And if you feel unsure or need guidance, SARS is happy to help you with any questions or concerns. If you need help with your tax SARS is a phone call away - they'll even help you fill in your tax return, no accountant required!
Become a tax paying citizen and reap the benefits.
Call EAW today: 011 793 6780 to find your advance your career.