A guide to filing your first tax return

Starting your first job is an exciting milestone, but it also comes with a new responsibility: becoming a taxpayer.

While the South African Revenue Service, or SARS, may seem intimidating at first, the system is generally user friendly for most employees.

If you earn more than R95,750 in a tax year (roughly R8,000 a month), after allowable deductions and rebates, you are officially in the tax net. This guide explains what first time workers need to know to stay compliant without unnecessary stress.

1. Know the dates
In South Africa, the tax year does not follow the calendar year. It runs from 1 March to 28 February.

Tax filing season is the period during which SARS allows individuals to submit their tax returns. For most non provisional taxpayers, this usually takes place between July and October each year following the tax year.

2. Get your digital access
You do not need to visit a SARS branch in person, as most tax services are available online.

The first step is to register on SARS eFiling at www.sars.gov.za or to download the SARS MobiApp. Your employer will usually register you for a tax reference number when you start working. If this has not been done, you can visit the SARS website to view the different ways in which you can register as a taxpayer.

3. Understanding the paperwork
Tax forms can be confusing at first, but the key documents are fairly straightforward.
IRP5: This is the most important document you will receive from your employer. It shows how much income you earned during the tax year and how much tax, known as PAYE, was deducted from your salary.

Even if you earn below the annual tax threshold, PAYE may still be deducted if your monthly income varies. When you submit your tax return, SARS will calculate whether you are due a refund.

ITR12: This is your personal income tax return. It is completed and submitted on eFiling and reflects your income and tax related information for the year.

ITA34: This is your Notice of Assessment. After you submit your return, SARS issues this document to confirm whether you owe additional tax or whether you will receive a refund.

4. How your tax is calculated
SARS calculates your tax by looking at your total income for the tax year and then applying allowable deductions, tax credits, and rebates.

Items that may reduce the amount of tax you pay include contributions to a pension fund, provident fund, or retirement annuity, as these contributions can lower your taxable income within SARS limits. Being a member of a registered medical aid scheme will qualify you for a medical tax credit, which directly reduces the tax you owe. Donations made to approved public benefit organisations can also be claimed as a deduction, provided you have a valid donation certificate.

A tax free savings account works differently. Contributions to a tax free savings account do not reduce your taxable income. The benefit is that all returns earned within the account, including interest, dividends, and capital gains, are not taxed.

5. Auto assessment
SARS may notify you that you have been auto assessed. This means SARS has already completed a draft tax return for you using information received from your employer, medical aid, and financial institutions.

Even if you are auto assessed, you should still log in to eFiling to review the information. If SARS has missed anything, such as a retirement annuity contribution or additional income, you are responsible for correcting it before the deadline.

Tips for first time taxpayers
Keep digital copies of your IRP5, medical aid certificates, and investment tax certificates. See quick reference to certificates below;

IRP5 – Employment income and PAYE deducted
IT3(b) – Interest and other investment income
IT3(c) - Capital gains
IT3(f) – Retirement fund contributions
IT3(s) – Tax free savings account income

If you earn income outside of your salary, such as freelance work, rental income, or investment income, this must be declared in your tax return. You are generally only regarded as a provisional taxpayer if this non salary income exceeds R30,000 in a tax year.

A financial adviser can help you structure your savings by using a retirement annuity, which may reduce your taxable income, and a tax free savings account, which allows investment growth to occur without tax.

Even if you believe you do not owe SARS any tax, reviewing your status on eFiling once a year is a good habit that can help you avoid penalties and administrative issues later.

The bottom line
For most first time employees, your employer already does the heavy lifting by deducting tax every month through PAYE. Filing a tax return is simply a final check to make sure everything is correct.

In many cases, first time taxpayers discover they have paid too much tax during the tax year and receive a refund. Either way, spending a few minutes on eFiling once a year can give you peace of mind and help you start your working life on the right financial footing.