22 April 2020 at 14:07
I have filed and completed the 2017 personal income tax for myself. I started receiving rental income from my property in March 2017. Where do I declare this income? Is it part of provisional tax and will I pay penalties for late submission?
1. The property is owned by myself and my wife. Will we both need to file tax returns for this Rental Income?
2. Does this mean a whole new tax return must be submitted, or is it only necessary to complete the IRP6?
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22 April 2020 at 14:52
The rental income is declared on your personal tax return (ITR12) under Local Rental Income section. Yes it is part of provisional tax, you would submit the tax returns i.e. an estimated taxable income of your salary and rent income profit/loss and pay the tax which gets calculated on the IRP6 after completing the taxable income information. Late payments are subject to a penalty of 10% of the total tax amount payable, and will be levied for either, or both payment periods (August and February). Not only that, SARS will lump on interest at their prescribed rate, which is currently 10% per annum.
You and your wife have to file and complete individual tax returns and provisional tax returns to SARS. The only tax returns that must be submitted to SARS is your personal individual tax returns and the 2 provisional tax returns for the specific tax year.
Then you would need to do either of the following on your personal tax returns:
1. Use that percentage and apply it to the incomes and expenses included in your tax return so that you only declare your % share of the rental income and expenses or,
2. Indicate that you're part of a partnership and provide the details in your tax return the percentage own by each other. You then need to declare 100% of the rental income and expenses and SARS will allocate your share of the rental income and expenses based on the partnership % you indicated.
Please see our blog on rental income tax guide Rental property deductions and what is provisional tax What is Provisional Tax? How and when?