Once again we bring you our top five most-asked questions we’ve received to our Helpdesk this past week. Hopefully this may help others who have been puzzling over the same issues.
1. The assessment (i.e ITA34) I received indicates the 'Net amount payable under this assessment after allowable credits' is 0.00, but in the text of the document and the detailed breakdown it indicates there is an amount owing. Could you assist me to understand this?
It sounds like you have already submitted a return for this tax year before, and that the original assessment indicated a balance due to be paid by you. The second return (i.e. your ‘revised version’) had no additional income or expenses compared to that which you declared on your original return and when SARS assessed this return, they gave you a 0.00 outcome. This just means that they have not found any differences and therefore made no adjustments to your tax liability and therefore the original assessment balance stands.
2. I am starting a new job with a basic salary only. My employer has told me I can structure my package to be tax efficient. I have opted to make a contribution of 12% of my salary to a Retirement Annuity Fund (RAF). What else could I do to optimize my tax efficiency? I will be working on a mine and won’t be traveling much for business. My wife is currently the main member of our medical aid - will it be more beneficial for me to be the main member seeing that I earn substantially more than her?
You can increase your RAF contribution up to a maximum of 27,5% of your taxable income (capped at R350 000 for the year). Including a travel allowance won’t be an option since you do not travel for work.. You can, however, claim for home office expenses if your employer allows you to work from home more than 50% of the time and you have a designated office at home used for work purposes. You may also depreciate any personal assets that you might use for work such as laptop, cellphone etc.
There is no difference as to who claims the medical benefit as the tax credits are a fixed monthly amount which is independent of taxable income. However, SARS generally grants the medical credit to the main member so it would be simpler and make more sense for your wife to claim it in her tax return.
3. I’m busy completing my provisional return - can my taxable income be a negative amount?
No, it unfortunately can’t be a negative amount as the eFiling return won’t allow it. A negative amount means that you suffered a loss and the purpose of the provisional tax return (IRP6) is to report your taxable income in order to calculate the tax on it. Therefore, if you suffered a loss then please report your taxable income as nil.
4. I have outstanding returns from the 2012 tax year, can I ignore them and just file a return for the 2018 tax year?
No, you should never ignore filing of old returns. You need to submit all your outstanding returns on your tax account to be tax compliant and to ensure that SARS pays you any refunds that they might owe you. SARS should have issued administrative penalties because these returns are late, so by submitting them ASAP you will avoid having any further penalties levied.
5. I am starting a new job and the company will be paying me a salary in advance to assist me in settling in as I need to relocate. I was wondering, would this amount be taxed seeing as it’s not actually going into my pocket directly?
Yes, the amount will be taxed, unless your new employer reimburses actual expenditure incurred (you need to provide proof) or if they make payment to the supplier directly.
In these cases, a tax-free exemption will apply for the expenditure actually incurred.