Every year there arises a misconception amongst taxpayers that a tax refund or 'tax rebate', as it is incorrectly known to many, is due to them by default. The thinking goes that because tax was paid dutifully each month, it will be returned to the taxpayer as if it were some sort of forced savings account. The unfortunate truth is that tax paid is just that - an amount paid over to SARS that represents your tax paid - money to be spent on running the country. Money you won't be getting back in your account.
Tax refunds arise only when too much tax was paid by the taxpayer because either SARS or the employer was unaware of certain deductions, such as medical aid or retirement annuity fund contributions, when the monthly Pay-As-You-Earn (PAYE) was calculated and paid over to SARS. When tax season comes around and taxpayers complete their ITR12income tax returns with all their information and the assessment results in an over payment of tax, then a refund becomes due. This is why it is important to complete your return 100% correctly and with all the possible information included, so as to maximise your chance at getting a tax refund. Unfortunately in most cases the PAYE deducted represents exactly the right amount of tax paid and neither SARS nor the taxpayer owe each other anything.
However in the case where your employer doesn’t know absolutely everything about your tax affairs, then submitting your return correctly becomes even more important as you may well have paid too much tax and be due a refund from SARS. Taxpayers should always keep in mind that it is their money being paid back to them, although a surprise refund can feel like a bonus!