The hardest part is still to come
Whether you managed to deliver a physical tax return to SARS or elected the online route, the easiest part of your task is now complete. The nail biting period begins as soon as you drop off the return and continues until SARS returns the income tax assessment to you. Early reports confirm that many individual taxpayers who used the online return submission process have already received these assessments. And not surprising, many of these computer assessments are demanding that taxpayers pay in more money.
We will have to wait till after 13 January 2008 to find out exactly how brutal SARS’s computer assessments are – as many taxpayers have registered online to take advantage of the automatic extension for return submission.
Whatever the case, it appears finance minister Trevor Manuel and SARS boss Pravin Gordhan will preside over another bumper income tax harvest. The economy recorded growth of 4.7% in the latest quarter, helping businesses to post record profits and creating thousands of new jobs. In addition, general wage levels have been boosted due to the overall higher levels of domestic consumer price inflation.
A 3.2 million return jackpot
Adrian Lackay, SA Revenue Services (SARS) spokesperson reports that by the end of October, 3.2 million taxpayers had filed tax returns in the current tax year. “This is a 20% increase from last year and the first time we pass the three million returns mark. Tax returns for the current year numbered to more than 2.3 million - an increase of 6%,” said Lackay.
Not surprisingly there has been a big uptake of the SARS eFiling alternative. Lackay notes that “More than 940000 returns have been issued via eFiling and already more than 250000 were filed. This is an increase of 600% as compared to last year.” We expect this trend will continue as more South Africans get Internet access – and as local telecoms competition heats up to provide cheaper broadband alternatives. After all, what is easier than completing and submitting the form online?
Improvements to administration and a continuing widening of the tax net have helped SARS to boost the income available for government’s budget requirements.
Personal taxpayers remain government’s whipping boy
A quick look at the 2006/2007 revised national revenue estimate reveals some interesting truths about the burden carried by individual taxpayers. We contribute R125.645bn to government taxes on income and profits – a whopping 50% of the R230.803bn total under that heading. Individual taxpayers also contribute significantly to the 114.351bn raised from Value Added Tax (VAT) and the R20.506bn from fuel levies.
This is good news for Manuel who has been able to budget a surplus due (among other things) to the continued strong revenue collections. All told, Manuel’s revised gross tax revenue for the 2006/2007 year will come in at R489.662bn. The amount is 17.33% more than the 2006 tax year – and 2008 is likely to yield an even bigger windfall – surging another 13.66% to R556.562bn.
We have yet to find someone who enjoys paying tax. We all accept it as part of our contribution to society – and that’s why many of us get so annoyed when government squanders the money. We believe that South Africa has enough revenue to significantly improve the lives of all its citizens. All that prevents us from achieving this goal is an apparent reluctance from some element in public service to efficiently direct their efforts to the task at hand.
Editor’s thoughts:
Many financial advisers offer assistance with tax returns as a part of the complete financial service. We would love to hear comments on your experiences with the new automated return submission. Post your comments after the article or send an email to [email protected]
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