Scenario 1: Your Income is Below the Tax Threshold

It's true that if your annual income falls below the official tax threshold, you might not be legally obligated to submit a tax return. However, this doesn't automatically mean there's no financial benefit to doing so.

Here’s why:
Your employer deducts Pay-As-You-Earn (PAYE) from your salary based on your regular earnings. But they might not be accounting for all your potential tax deductions. These can include:

• Retirement Annuity / Provident Fund Contributions: If you make personal contributions to a retirement fund, these are often deductible.
• Medical Aid Contributions: While your employer might process some medical aid information, the full picture, including out-of-pocket qualifying medical expenses, often isn't captured until you declare it on a return.
• Travel Claims: If you use your personal vehicle for business purposes and have a logbook, you might be entitled to claim a travel allowance deduction.
• Donations to Public Benefit Organisations (PBOs): Donations to registered PBOs can also be tax-deductible up to a certain limit.

The Cost of Not Checking: We've encountered numerous cases where individuals assumed they didn't need to act. Had they simply reviewed their situation and submitted a return detailing these deductions, they could have received a welcome refund from SARS – sometimes amounting to a few thousand Rand!

Scenario 2: You've Been Auto-Assessed by SARS

SARS's auto-assessment initiative aims to simplify the tax filing process. They use information already provided by third parties (like your employer, medical aid, and investment institutions) to pre-populate a tax return and issue an assessment.

While convenient, relying solely on an auto-assessment without review can be risky for similar reasons:

• Incomplete Information: SARS bases the auto-assessment on the data they have. If there are additional deductions or income sources they don't know about, your assessment might not be accurate.
• Missed Deductions: Just like with those below the threshold, deductions for things like additional medical expenses, travel claims, or home office expenses (if applicable and meeting strict criteria) might not be included in the auto-assessment. You need to actively add these.
• Errors in Third-Party Data: Though rare, the information supplied to SARS by third parties can sometimes contain errors. It's your responsibility to verify its accuracy.

The Takeaway: Accepting an auto-assessment without scrutinising it is like signing a contract without reading the fine print. You might be agreeing to a tax liability (or a smaller refund) than you're actually due.

Beyond the Refund: Other Reasons to Engage

Even if a refund isn't due, ensuring your tax affairs are accurate and up-to-date offers peace of mind and can prevent future complications with SARS. A correctly filed return also serves as proof of income, which can be vital for loan applications or other financial processes.

What Should You Do?

1. Don't Assume: Whether you're below the threshold or auto-assessed, take a few moments to consider your financial activities over the past tax year.
2. Gather Your Documents: Collect your IRP5/IT3(a)s, medical aid certificates, retirement annuity contribution certificates, travel logbook, donation receipts, and any other relevant financial information.
3. Review Carefully:
   • If auto-assessed, log into SARS eFiling and meticulously check the pre-populated information against your documents.
   • If below the threshold, use your documents to see if filing a return could result in a refund due to unclaimed deductions.
4. Amend or File if Necessary: If you find discrepancies in your auto-assessment or identify potential deductions, you'll need to amend and resubmit the return. If you're below the threshold but could claim a refund, you'll need to file a return.

We're Here to Help!

Understanding tax deductions and navigating the SARS eFiling system can be daunting. If you're unsure whether you're missing out on a potential refund or need assistance reviewing your auto-assessment, our team is ready to assist.

Don't leave your money on the table. A quick check could make a surprising difference to your bank balance!