Earn less than R500,000 a year? SARS says you don't have to file returns - here's why you probably should
- SARS announced this week that those who earn less than R500,000 a year don't have to file a tax return this year.
- There are a number of conditions, including that you only had one employer and earned no other income.
- Even if you comply with all the conditions, a tax expert says there are reasons you should reconsider skipping this filing season.
- This includes that maintaining an unbroken tax record with SARS could stand you in good stead.
- For more stories, go to Business Insider SA.
On Tuesday, SARS announced that if you earn less than R500,000 in a year you don't have to file a tax return this year. Previously this was only for those who earned less than R350,000 a year.
But beware, says Marc Seivitz, director of the online tax assistance service TaxTim, the following need to apply:
- You have worked for a full 12 months for one employer only and received an IRP5;
- You have no additional allowances or deductions to claim such as medical, retirement or donations;
- You have no travel allowance nor do you make use of a company car;
- Most importantly, you earned absolutely no other income during the tax year;
- You did not make any capital gains greater then R40,000 for the tax year.
If you do earn less than R500,000 and all the conditions apply, you should still consider filing a return, Seivitz says. "You (should) take great care here, and understand your duties properly, because if you don't, you may suffer for it later on."
Seivitz highlights these reasons why you should consider still filing a tax return:
1. You may miss out on a refund
Why let SARS keep your money if you are due a refund? A refund is money you overpaid on your taxes and it belongs to you.
You can only get a refund if you file a return. Something as simple as claiming Medical expenses or working for less than 12 months of the tax year can trigger a tax refund, depending on your situation. (You can calculate a refund here.)
2. You may not be able to borrow money
If you wish to borrow money in the form of a mortgage for a home, or a long term loan of any kind in future, you may need a Tax Clearance Certificate. This can only be obtained if all your returns are up to date and filed appropriately.
3. SARS might change its mind
If you normally submit, but this year you don't, SARS could administer administrative penalties later on down the line for not being compliant.
4. You can't access your retirement fund payout
Filing a tax return each and every year means that should you receive a payout from a fund at any stage, then you will not have any hassle in getting the money. If you retire or are retrenched, or just need to take money out of your fund early, you need to be tax compliant.
5. A complete record stands in your favour
Having an unbroken filing record leaves SARS officials with no reason to suspect that you are hiding information from them. "Filing a tax return means you are being a good citizen and contributing towards society," says Seivitz.
"It is important to remember that this (R500,000) filing threshold, provided you meet all these conditions, is not the same as the threshold to actually pay tax or have PAYE deducted," says Seivitz.
This remains at R79,000 per year for those under 65 years for the 2020 tax year.
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