Taxes can be a confusing subject to many people — what is individual income tax, are you required to file your taxes yourself, when does SARS expect you to file your tax returns, what happens when you don’t file your individual tax return, etc.
These are some of the questions we often get asked and, in this article, we will answer those questions and more.
What Is Individual Income Tax?
The individual income tax (or personal income tax) is a tax levied on the wages, salaries, dividends, interest, and other income a person earns throughout the year. The tax is generally imposed by the state in which the income is earned.
Who Is Required To Pay Individual Income Tax?
You are liable to pay income tax if you earn more than:
For the 2022 year of assessment (1 March 2021 – 28 February 2022)
- R87 300 if you are younger than 65 years.
- If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R135 150.
- For taxpayers aged 75 years and older, this threshold is R151 100.
For the 2021 year of assessment (1 March 2020 – 28 February 2021)
- R83 100 if you are younger than 65 years.
- If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R128 650.
- For taxpayers aged 75 years and older, this threshold is R143 850.
Top tip: You do not need to submit a return if ALL the criteria below apply to you:
- Your total employment income/salary for the year (March 2019 to February 2020) before tax (gross income) was not more than R500 000; and
- You only received employment income/salary for the full year of assessment (March 2019 to February 2020) from one employer; and
- You have no car allowance/company car/ travel allowance or other income (e.g. interest or rental income); and
- You are not claiming tax-related deductions/rebates (e.g. medical expenses, retirement annuity contributions other than pension contributions made by your employer, travel).
The rates of tax chargeable on taxable income are determined annually by Parliament, and are generally referred to as “marginal rates of tax” or “statutory rates”. The rate of tax levied on an individual is set on a sliding scale which results in the tax increasing as taxable income increases. Every year, the Minister of Finance announces the rates to be levied by publishing the applicable tax tables during the annual budget speech.
Below, you will see the tax table for individuals, as well as the Tax Rebates.
2022 tax year (1 March 2021 – 28 February 2022) – See the changes from the previous year
When Is The Individual Income Tax Expected?
Taxpayers, your turn to file your tax return starts on 1 July this year. The good news is that a significant number of individual taxpayers will be auto-assessed again this year, and this process will start in July
Tax season for individual taxpayers is expected to open on 1 July 2021 with the following deadlines:
- 31 October 2021 for branch filing
- 4 December 2021 for non-provisional taxpayers who use eFiling
What To Prepare Before Filing Starts?
Supporting documents are required to complete an income tax return. Below is a list of documentation/information that may be required:
- IRP5/IT3(a) Employees Tax Certificate.
- Certificates received for local interest income, foreign interest income, and foreign dividend income
- If you are married in a community of property, the certificates received by both you (the taxpayer) and your spouse are required
- If you married out of community of property only the certificates that you receive are required.
- Documents relating to medical expenses such as the income tax certificate from your medical scheme received for the period 1 March and ending 28 February (if you belong to a medical scheme)
- Proof of qualifying medical expenses paid by you and not recovered from a medical scheme
- Completed ITR-DD Confirmation of diagnosis Form of disability (if you want to claim disability-related expenses).
4 Reasons to Not Skip Your Tax Return Filing This Season
1. You miss out on your refund
Why let SARS keep your money if you are due a refund? A refund is money you overpaid on your taxes and it belongs to you. You can only get a refund if you file a return. Something as simple as claiming medical expenses or working for less than 12 months of the tax year can trigger a tax refund, depending on your situation.
2. You may not be able to borrow money
If you wish to borrow money in the form of a mortgage for a home, or a long-term loan of any kind in the future, you may need a Tax Clearance Certificate. This can only be obtained if all your returns are up to date and filed appropriately.
3. You can’t access your retirement fund
Filing a tax return every year means that you will not have any hassle getting the money if you receive a pay-out from a fund at any stage. If you retire or are retrenched, or just need to take money out of your fund early, you need to be tax compliant.
4. A complete record stands in your favor
Having an unbroken filing record leaves SARS officials with no reason to suspect that you are hiding information from them. Filing a tax return means you are being a good citizen and contributing to society
I understand that properly filling taxes and staying compliant with SARS can be too technical and complicated for most people. Hence, I highly recommend you hire a reputable accounting firm to help you stay compliant with SARS and significantly save the stress, time, and money you could otherwise incur over time.