“Few of us ever test our powers of deduction, except when filling out an income tax form.” (Laurence J. Peter)
In this article, we look at the who, how and when of this 2022 Tax Season; highlight some issues that require special attention; and suggest practical next steps to help you avoid the last-minute rush, the risk of errors and omissions, and the cost of late submissions, penalties and audits.
At a glance
Tax Season 2022 opens 1 July 2022 – here is a quick overview of who must submit, how they must do so and when by:
Who is exempt from filing?
- Individuals receiving total annual gross income of less than R500,000 from only one source with no other allowances or benefits, and from whom PAYE has been deducted as per the prescribed tax deduction tables.
- Individuals who are not claiming tax related deductions or rebates such as medical expenses, travel and retirement annuity contributions other than pension contributions made by their employer.
- Individuals who only receive interest below the interest exemption thresholds; amounts from tax-free savings accounts; or dividends.
- Individuals who are non-residents throughout the year.
Even if you could be exempt at first glance you might still benefit from filing a return due to your particular circumstances. If there is any doubt, professional advice is essential.
Issues requiring special attention
- This year’s tax season is substantially shorter than last year’s for provisional, non-provisional, manual and branch office submissions!
Last year, non-provisional taxpayers had until 23 November, extended to 2 December at the last minute. This year’s deadline is a month earlier, on 24 October 2022.
Similarly, the 23 January 2023 deadline for provisional taxpayers is a week earlier. That’s less than seven months away, including the December and January holiday periods.
- Home office expenses remain in the spotlight, as SARS disallowed over 60% of home office claims last year. Make sure you qualify for this deduction, and that it is correctly pro-rata calculated for allowable non-capital expenses such as rates and taxes, electricity, repairs and insurance. Deductions can’t be claimed for reimbursements or equipment provided by an employer without charge. Also be sure to understand the potential capital gains tax impact when you sell your home for which the deduction was claimed. Professional advice is essential here!
- Last year more than three million taxpayers were auto-assessed, and significantly more individual taxpayers will be auto-assessed this year. If you are auto-assessed, SARS will send you an SMS that your tax return has been pre-populated by SARS on eFiling or the SARS MobiApp. Check with your accountant before making any decisions about your auto-assessment.
- Be sure to check if your auto-assessment is correct as soon as you receive the SMS notification, because this year there is no need to “accept” the assessment: SARS will regard it as accepted unless changes are made as detailed below before the 24 October deadline. If an amount is due to SARS, the next step is simply to make the payment via eFiling or SARS MobiApp. If a refund is due to you, check that your banking details with SARS are correct and simply wait for the refund.If you don’t agree with the automated assessment, an accurate ITR12 tax return can be filed within 40 business days of the date of the auto assessment. If this return is filed after 24 October, it will be subject to normal late submission admin penalties and interest. If SARS accepts the changes, a reduced or additional assessment will be issued. If not, the normal objection and appeal options are available
- SARS has stated that Company Income Tax (CIT) filing compliance is currently a focus and urges companies to note that it is compulsory for registered companies that are required to file a return to do so on time and complete in all respects.
- Non-compliance is as expensive as ever, with the same penalty rules for auto-assessments expected to apply for the 2022 filing season. The late submission admin penalty ranges from R250 to R16,000 a month for up to 35 months, depending on the assessed loss or taxable income of the taxpayer for the year prior to the year being assessed.
In addition, failure to submit the return(s) within the prescribed period could result in a summons and/or criminal prosecution, which upon conviction is subject to a fine or to imprisonment for a period of up to two years.
- Get started immediately to avoid the last-minute rush, and to minimise the risk of errors and omissions. Diarise the key dates, allowing time to attend to any potential problems, such as finding documents, obtaining third party information or getting professional advice.
- Ensure all your information is correct. Update your personal information such as banking details, address and contact details on eFiling or the SARS MobiApp, and make sure all information provided on the return is true. SARS has significantly improved its abilities to draw information from third parties, including employers, financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers, making it easier than ever before for SARS to detect incorrect or undisclosed information.
- Check that you have received certificates and documents relevant in determining your tax obligations such as your IRP5/IT3(a)s and other tax certificates like medical certificates, retirement annuity fund certificate and other 3rd party data. If not, immediately contact the 3rd party data provider.
- Keep accurate records of all the calculations and source documents used as SARS may ask for these documents to be verified and/or for the calculations to be justified.
- Consider professional assistance to ensure all exemptions, rebates and deductions for businesses and individuals are included and that the many terms and conditions, dictating when and how these may be claimed, have been met. Last year, SARS refunded more than R17 billion to taxpayers.
- Plan ahead financially to meet the tax liability that will be due along with the submission deadline.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.