Dr Annelize Oosthuizen
The South African Revenue Service (SARS) tax filing season for the 2024 year of assessment (that is, for income earned during the period 1 March 2023-29 February 2024) commenced on 15 July 2024.
Individual taxpayers who were not auto assessed and who were not registered as provisional taxpayers have until 21 October 2024 to submit their income tax returns (ITR12). Those who are also registered for provisional tax have until 20 January 2025 to submit their income tax returns. Failure to submit a return on time will result in monthly non-compliance penalties being levied by SARS.
Although numerous taxpayers have been auto assessed and therefore do not have to submit a return on the system, it is still important to verify the information on your income tax return. These returns have been automatically populated based on information provided to SARS by third parties. In terms of the Tax Administration Act, the onus is on the taxpayer to verify that all information is correct, and that all income has been declared. If you do not agree with the information on the return, you will have to submit a return, which will then replace the auto-assessed return. You can access and submit your income tax return by logging into your tax profile with your unique username and password. This can be done by using SARS eFiling or on the SARS MobiApp on your smartphone.
Some reasons why you should submit a return instead of accepting the auto-assessed return include the following:
• Not all income has been declared (remember, a South African resident is taxed on worldwide income and not only on South African source income, whereas a non-resident is only taxed on South African source income).
• You wish to claim deductions that were not initially included in the return (such as other qualifying medical expenses paid, or expenses incurred while carrying on another trade).
If you need to interact with SARS (for example to get your tax number), you can do it via your mobile device and you do not have to visit a SARS branch:
• By telephone, where you can contact the SARS Contact Centre to speak to an agent during working hours.
• By sending an SMS to 47277, services are free of charge. This is only for individual taxpayers registered for personal income tax; you have to use the following text-specific information, followed by a space and your ID number:
- File to confirm whether or not you should file an income tax return. This will only be available once filing season opens.
- TRN to obtain your tax number.
- Balance to obtain your balance statement of amounts owing to or by SARS.
- Booking for a request to book an online appointment.
• Via online services such as the SARS MobiApp or the SARS webpage (www.sars.gov.za)
With SARS using various methods to detect tax evasion, such as obtaining information from third parties, performing audits (including lifestyle audits), and making use of artificial intelligence, it is imperative that taxpayers act honestly and ethically to avoid being charged with a criminal offence. Make sure that you have proper records and documentation of all income and expenses eligible for a tax deduction, since SARS might require you to upload supporting documents after submitting your return. In terms of the Tax Administration Act, all documents should be kept for at least five years.
Noteworthy tax amendments for the 2024 year of assessment
A noteworthy provision applicable to the 2024 year of assessment is the section 6C solar energy tax credit. The section 6C tax credit is a once-off tax credit available to natural persons. This tax credit only applies to the 2024 year of assessment and is available to natural persons who have installed solar panels at their place of residence. The purpose of this credit was to encourage natural persons to invest in renewable energy, so continuing trade is not a requirement to be eligible for this credit. The credit can only be claimed if the deduction provided for under sections 12B or 12BA (for persons using their residence for trading purposes) has not been claimed. The credit is calculated as 25% of the actual cost of the solar photovoltaic panels and is limited to a maximum amount of R15 000. The cost of installing the solar system and the cost of other components such as supporting structures, batteries, and inverters do not qualify for this credit. It is further required that the solar panels were new and unused when acquired, that each panel has a generating capacity of not less than 275 W, have been inspected and tested by a qualified person who has issued the required electrical certificate of compliance, and that it was put into use on or after 1 March 2023 and no later than 29 February 2024. The solar panels should also be installed and mounted or affixed to the residence used mainly for domestic purposes and the installation must be connected to the distribution board of such residence. Mobile solar panels will therefore not qualify.
Amendments to keep in mind for next year’s filing season (for the 2025 year of assessment)
From 1 September 2024, taxpayers will also be allowed to withdraw money from their retirement funds as the so-called two-pot system takes effect. Your retirement fund savings will be divided into two pots – a savings pot and a retirement pot. On 31 August 2024, the lesser amount – either 10% of your fund’s value or R30 000 – will be designated as the initial funding for the savings pot, known as seeding capital. This allocation is a singular event to commence the dual-pot structure and will not take place annually.
Contributions made to retirement funds from 1 September 2024 will be allocated between the two pots. One part, accounting for one third of the contributions, will go into the savings pot and the remaining part, making up two thirds of the contributions, will be allocated to the retirement pot that members cannot access until they retire. Members will be allowed to withdraw funds from the savings pot once a year without having to resign from employment to access the funds. The funds in the retirement pot can, however, only be accessed once the employee retires. It is important to remember that, should you make use of this, your ultimate retirement fund value will decrease. Such withdrawals will also be taxed at the normal marginal tax rate at which your other taxable income is taxed, which is less favourable than the rates that would have applied had you reached your retirement age.
Concluding comments
With frequent changes to tax legislation, it is important to stay up to date and seek professional advice. By law, only a registered tax practitioner is allowed to provide tax services such as filing your return on your behalf or providing tax advice. Make sure that you are not defrauded and that someone is indeed a registered tax practitioner before granting them access to your financial affairs. You can verify the tax practitioner status of a person on the SARS website by entering their tax practitioner number (e.g. PR-0000000).
Institutional experts can be found at: https://www.ufs.ac.za/media/leading-researchers
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