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SARS Tax Return Explained

July is the month that the SARS Tax Season begins and this year taxpayers will be able to start filing their tax returns from 7 July. Non-provisional taxpayers have until the 23rd of October 2023 to file and provisional taxpayers until 24 January 2024.


Auto Assessment

Last year SARS started calculating taxpayers refunds or liabilities and this was referred to as an auto assessment. Taxpayers then had the option to either accept SARS calculation (the assessment) or object to it and file the return themselves.


How does SARS calculate your auto assessment?

SARS does an auto assessment from information already submitted to SARS by your employer, banks, insurance companies, medical aids etc. They then use this information to pre-populate your tax return and calculate the tax refund due to you or any additional tax that you may need to pay

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Should you not be happy with SARS’ calculation, you will have until the 23rd of October to amend the return and file the corrected return.


Deductions Explained

Travel Claim

If you have a personal vehicle that you are using for work purposes and receive a travel allowance from your employer, SARS will allow you to claim business expenses against the income you have earned during the year. In order to do this SARS will require you to submit a log book which must contain the following information.

  • Details of the car - make, model, year purchased, cost of vehicle, registration.,

    • SARS may request a purchase document of the vehicle to verify the cost of the vehicle and also that it is in your name.

  • Mileage both at the start (01 March) and end (28 February) of tax year.

  • Amount of KM travelled for business purposes.

  • The details of all business trips undertaken - date of trip, where you left from, where you went to, the reason for the trip and the mileage for the trip.

Medical Expenses

There are 2 claims you are eligible for:


Medical Aid Contribution Tax Credit

SARS has a fixed amount per person that it allows you to claim for in respect of contributions made to the medical aid.


Additional Medical Expenses

SARS gives you an additional claim on what is referred to as your ‘out of pocket’ medical expenses. This claim covers medical costs that you have paid personally to doctors or for chronic/prescription medication that you may have purchased. Only the amount that exceeds 7.5% of your taxable income is claimable from SARS unless you are over the age of 65 or have a disabled family member in which case all expenses qualify. The qualifying expenses are not deducted in full - SARS divides these expenses by either a factor of 4 (if under 65) or 3 (if over 65 or you have a disabled family member).


Retirement Fund

Any contributions made to a pension, provident or retirement annuity fund may be deducted from your taxable income and will reduce the amount of tax you need to pay. The amount you can claim is however limited to 27.5% of your taxable income or R350 000, whatever is higher.

An important point to note is that SARS adds any personal contributions you have made such as a retirement annuity to any contributions that your employer may have made should you be part of an employer pensioner or provident fund scheme. Therefore, should your personal contribution and that of your employer's contribution exceed the SARS limits, you will not be able to claim all of the contributions on your current tax return.


Capital Gains Tax Payable On The Sale Of A House

If you have sold your primary residence (home), it must be declared on your tax return. SARS does have access to the deeds office and they will be aware that you sold the property. If you sold your house for more than what you paid for it, this is called a capital gain and you may be liable for tax on this gain (capital gains tax).


The good news is that SARS exempts the first R2million of any gain from tax and this is called the Primary Residence Rebate. Only the gain amount in excess of R2million will be subject to tax.


When calculating the cost of the house and/or proceeds to be used in the calculation, SARS allows agents commission paid, transfer duty, bond registration costs and attorney transfer costs, to be deducted in determining the profit.


If you have more than one property and are renting the additional property out, make sure to disclose this on your tax return. Should you have an investment property, the expenses can be deducted from the income, this can include electricity, water, rates, body corporate levies, repairs and maintenance as well as the interest from the bond of the property (not the full bond repayment, only the interest).


Other Common Questions

Personal Use Assets

Should you sell a car, caravan, household furniture, a boat, these are referred to as personal use assets, and SARS does not look at any capital gains tax or income tax on the sale of those assets. You will therefore not need to pay tax on the income from them should you dispose of them during the year.


Interest that is earned

If you earn more than R23 800 worth of interest on a savings account or an investment, the amount that exceeds R23 800 will be subject to tax from SARS. If you are older than 65 years of age, SARS increases this amount to R34 500.


If you have any further questions or need assistance, contact My Finance Partner today!

www.mfpartner.co.za

info@mfpartner.co.za



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