Got your IRP 5 certificate…now what

Several employees have / will shortly be receiving their IRP5’s certificates from their employers and will probably be wondering what to do. In instances where employees are already registered as taxpayers and are required to file tax returns, the good news is that SARS has released the 2010 individual tax returns online. In instances where an employee is not registered as a taxpayer and is uncertain whether to file a tax return, now is a good time to get going with the process.

Step one – to register or not to register

If you are not registered as a taxpayer do you need to be registered? Generally, if you earn above R120 000 per annum or you have an allowance against which to claim a deduction e.g. a travel allowance, you must register for tax. Casual workers who earned below the tax threshold and had employees’ tax withheld on their remuneration of 25%, should also file a tax return as they probably will qualify for a refund of their tax.

Once you have determined that you need to be registered as a taxpayer, you need to apply to be registered. You can obtain the form from the SARS website, www.sars.gov.za or by visiting your SARS office. You should then receive a tax reference numbers within 4 – 6 weeks. .Only once you have received your tax reference number can you file a tax return.

Step two – E-file or not to e-file

If you have access to a computer, it is best to register as an e-filing user and submit your tax return electronically. Details regarding this simple process of registration can be found on the SARS website. It is easy and the great news is that most of the tax return is already pre-populated e.g. your IRP5 information. All you need to do is verify your personal details, add in any income not reflected on the tax return and claim deductions where possible. Even better news is that your tax return should be assessed quickly and if you are due a refund, it should be paid into your bank account quickly (just in time for Christmas). The manual method is similar, but takes longer to process.

Step three – Getting it together

Pull out the shoe box with all the information needed to file a tax return. This will include (amongst others):
•    Retirement annuity fund certificates – to claim a deduction
•    Opening and closing odometer readings/logbook in order to claim against your travel allowance
•    Interest earned during the tax year – may be taxable
•    Expenditure incurred should you have leased out your house e.g.: levies, interest and fees paid to the bank (should you have a mortgage), water and electricity etc. You may be able to offset the rental received against the expenditure incurred.
•    Professional membership fees that you have paid over e.g. HPCSA, SAICA fees etc – may be deductible
•    Receipts for any donations made to Public Benefit organisations – may be deductible

If you don’t have this information freely available, take the time to contact your broker, bank etc.

Step four – filing your return

Should you opt to e-file, once your tax return is uploaded on e-filing, you can complete your tax return and submit it online. E-filers, who are not provisional taxpayers, have up until 26 November 2010 to file their tax returns. Provisional taxpayers who are filing electronically have up until 31 January 2010 to file their tax return. The due date for so called “paper returns” is 30 September 2010.
It’s time to file your return (and hopefully get a refund).

TAXtalk: www.taxtalk.co.za