Earlier this month, SARS announced a few changes and enhancements for the 2019 tax season. These include a revamped SARS MobiApp for simplified returns, improvements to e-filing and more streamlined services at branches. However, the change that dominated media attention is the increase to the tax return threshold to R500 000. This is not to be confused with the tax threshold (i.e. when you start paying tax) which remains R78 150 for individuals younger than 65 years for 2019.
Criteria for tax return threshold
The change means that individuals who earn R500 000 or less per year and meet certain criteria, will not need to complete income tax returns for 2019.
SARS explained that taxpayers who meet the following criteria will not need to file returns:
• Employed by one employer for the full tax year (1 March 2018 – 28 February 2019) and received an IRP5.
• Total employment income per year before tax does not exceed R500 000 and capital gains that do not exceed R40 000 per year.
• Earned no other form of income for the tax year (e.g. car allowance, business income, rental income, taxable interest or income from another job).
• Do not have any additional allowable tax-related deductions to claim (e.g. medical expenses, retirement annuity contributions and travel expenses).
If an individual meets the criteria above, they are not required to complete a return. However, this does not mean that the individual is not required to pay tax. The tax threshold remains R78 150 for those under 65 years for 2019 tax season.
Benefits of submitting a return anyway
While the increased threshold might be attractive to many taxpayers, there may be benefits of filing a tax return even if you meet the criteria. Some benefits include:
1. CLAIMING DEDUCTIONS AND REFUNDS
If you have allowable tax-related deductions such as medical expenses, travel expenses and retirement contributions, it is advisable to submit a tax return. If you are due refunds for whatever reason, these will not be paid out by SARS without completing your tax returns.
2. ACCESSING RETIREMENT FUND PAYOUTS
If you need to draw lump sums from your retirement fund because of retrenchment or other reasons, SARS will first apply your payout to any outstanding tax debt you may have and not authorise the directive to your fund because of outstanding tax returns.
3. ACCESS TO FINANCE AND TAX COMPLIANCE
There are many activities that may require tax clearance – such as accessing finance from a bank or private funder and long-stay visas to some countries. At the moment, tax clearance certificates can only be issued if you have filed income tax returns and have no debt outstanding.
Tax season starts on 1 July 2019 for taxpayers using e-filing or the SARS MobiApp and 1 August 2019 for all taxpayers.
Need advice or help to make sure your tax compliance is in order before it’s open season for tax? Contact us, we’ll be happy to help.