Last month the finance miniÂster announced that individuals will be completing new, simpler tax forms this year. Instead of filling in 10 pages, individuals paying PAYE will only have to fill in two pages. You will not have to do any calculations, nor will you have to supply supporting documents such as an IRP5 — you will, however, need to keep these somewhere safe in case of an audit.
The South African Revenue Service has a new address-verification process which will confirm addresses by third-party information. This should ensure that a higher percentage of people will receive their tax returns, which will be sent out next month.
If you have not received your return by the end of August, however, you should contact the Sars call centre on 0860 12 1218. Tax returns are also available at branch offices and can be downloaded from the Sars website. Larger employers will be provided with a DVD containing staff tax returns. The deadline for completion is October 31 2007 and there will be no extensions.
Sars has put some incentives in place to encourage people to complete their tax returns online at www.sarsefiling.gov.za. If you are owed money there will be faster turnaround times, but you will be allowed to delay payment to January if you owe Sars money.
Beware if you are not being 100% honest about your income. Sars has a new method of risk detection and profiling, which will identify risk and be able to use third-party information to verify your information, which is why it does not need you to submit supporting documents.
Your forms may be simpler, but tax is not. According to Keith Jordaan, professor of tax at the University of the North West and consultant to chartered accountancy firm BDO, there are some areas where taxpayers need to be careful.
Maternity leave: Paying back maternity leave could be more expensive than you realise. Most companies that provide paid maternity leave require the woman to sign an agreement that she will return to the company and work for a specific time period. If she fails to do so, she has to pay all her maternity benefits back. Should she not return, Jordaan says, Sars is not legally required to refund the tax paid. In other words, her company may have paid R30 000 while she was on maternity leave, but she only received R22 500 after tax. She is obliged to repay the company R30 000 with no refund from Sars. Jordaan says, although there are cases in which Sars has been lenient with maternity leave, legally it is not required to refund it. Exactly the same ruling would apply for any paid leave if the employee was required to refund the company.
Restraint of trade: Many professionals are required to sign a restraint of trade agreement. The employee is paid upfront for signing the agreement but, should he or she go and work for a competitor, the money has to be repaid — including the tax. As with paid leave, the employee will repay the full amount with no tax refund. If the new employer offers to pay back the restraint of trade on the employee’s behalf, Jordaan says further tax will be paid because, as soon as an employer settles a debt on your behalf, it constitutes a fringe benefit and you will be taxed on that payment, even though you never received a cent.