Financial stability is a big challenge for many of us these days. One area in which it’s possible to stay on top of things is filing income tax returns properly and on time.

The tax year runs from 1 March until 28 or 29 February each year. You need to submit a tax return once a year if your only income is from your job. The deadline for those of us paying personal income tax is always in October – in 2022, it fell on 24 October.

You can submit your return in a number of ways: via a handwritten form posted to SARS; by making an appointment at a SARS branch to receive eFiling assistance; doing it online yourself using eFiling; or using the SARS MobiApp.

The most important supporting documents

• Income Tax Certificate (IRP5): this is issued by your employer and normally filed directly with SARS.
• Tax certificates: an IT3(b) is a summary of interest and dividends earned; an IT3(c) contains a summary of any sales of investments (shares); and an IT3(s) contains a summary of the interest and dividends earned on your tax-free savings account. You will receive all three from financial institutions such as a bank.
• Medical-aid tax certificate: you will receive this from your medical aid.
• Logbook: if you use your car for work or business purposes, or receive a travel allowance from your employer, you’ll need a detailed record of your business and personal travels to be able to deduct travel expenses.
• Any relevant invoices and statements.

Easy wins

• Your monthly contributions to pension, provident and retirement annuity funds are tax deductible. You may deduct up to 27.5% of your gross salary or taxable income (whichever is the higher), up to a limit of R350 000.
• SARS allows you to save in tax-free savings accounts without having to pay tax on the interest earned. There is a limit, though. You can invest up to R36 000 per year with a lifetime limit of R500 000.
• It’s important not to invest more than your annual allowance (R36 000), as SARS will penalise you by charging 40% tax on the extra amount. For example, if you deposited R40 000 in a tax year – R4 000 more than R36 000 – the penalty will be 40% of R4 000, which is R1 600.
• If you belong to a medical aid, the primary member and the first dependant on the policy – say, you and your partner – can deduct R332 monthly. After that, you can deduct a further tax credit of R224 for every other dependant, such as your children.
• If you have paid for medical expenses that were not covered by your medical aid, you could claim for further tax deductions provided they were for treatment by medical professionals or a hospital stay. Please keep your invoices as well as proof of payment to claim the deduction. SARS then applies a formula to work out whether you spent enough to qualify for an ‘additional medical expenses tax credit’.

What are auto-assessments?

SARS has introduced auto-assessments for taxpayers who normally have one source of income like a salary and who have a medical aid or retirement annuity plus receive interest on their bank accounts.

Once your auto-assessment is ready, you'll get an SMS. If you're happy with it, you don’t have to do anything; it will be automatically accepted. If you are unhappy with it, you should complete your tax returns as if the auto-assessment did not exist within 40 working days from the date that the auto-assessment was issued.

This will probably involve checking all third-party documents, such as your medical aid tax certificate. If there is a problem with one of them, you’ll have to request an updated certificate to submit with your return.

If your auto-assessment shows you owe money to SARS, pay on time to avoid penalties.

What about working from home?

To be able to deduct your ‘home office’ and expenses, you must have a dedicated office that is set up with what you need to do your work. Working at the kitchen table does not count. You also have to work from home more than 50% of the time and your home office must be used only as a home office.

What you may deduct

• A portion of your rent, bond interest and home repairs, as well as municipal rates, electricity and water.
• Wear and tear on office equipment which you own.
• SARS will require proof of the above deductions, so keep detailed records of your expenses and supporting documents, such as your municipal accounts. These deductions could mean having to pay more capital gains tax when you sell your home.

What are the SARS thresholds?

SARS thresholds are income limits. This means that if the money you earn per year is of a certain amount or below, you don’t have to submit a tax return. For the 2022 tax year, the limits are:

• R87 300 if you are younger than 65 (2023: R91 250);
• R135 150 if you are 65 and older (2023: R141 250); and
• R151 100 if you are 75 or older (2023: R157 900).

Worried about getting your tax return in on time?

Send your tax, retirement and any other money-related queries to todayomc@oldmutual.com, or speak to your financial advisor today.Did you know that South Africa’s two-pot system for retirement savings introduces partial preservation, while allowing some access to savings before retirement? Learn more here.

*All information provided in this piece was correct at the time of publication.