Last Friday, July 7, marked the beginning of the 2023 income tax filing season for South African taxpayers. Non-provisional taxpayers have until October 23 to file their returns and provisional taxpayers have until January 24 next year.
If you’re lucky, you won’t have to do a thing ‒ or very little. You may fall below the income tax threshold, or fall below the threshold of having to file a tax return, or your return may have been pre-populated by the South African Revenue Service (Sars) and “auto-assessed”.
However, if your financial affairs are more complicated, you may have to add further information to your tax return before you can be assessed. If you are a provisional taxpayer, you’ll have to do most of the drudge work yourself or employ a tax practitioner to do it for you.
Whichever category you fall under, make sure you do everything that Sars requires of you, because the cost of non-compliance can be high. All filing must be done through Sars e-Filing or the Sars Mobi-App, or done electronically at a branch.
The two most important thresholds to worry about are the threshold below which you don’t pay any tax and the threshold below which pay-as-you-earn (PAYE) taxpayers don’t have to file a return (although you still pay tax).
Income thresholds: You do not have to file a return or pay any tax for the 2022/2023 tax year if your total income between March 1, 2022 and February 28, 2023 was less than:
- R91 250 if you are younger than 65 years.
- R141 250 if you are 65 years or older, but below 75 years.
- R157 900 if you are aged 75 or older.
Return filing threshold: PAYE taxpayers are salaried employees whose tax is deducted each month by their employers. You don’t need to submit a return if the following applies:
- Your total pre-tax salary for the year was not more than R500 000 and PAYE tax has been deducted by your employer; and
- You worked for a single employer; and
- You have no additional employer-related allowances such as a car allowance; and
- You have no other sources of income, such as rental or interest income; and
- You are not claiming deductions.
Salaried taxpayers whose financial affairs are relatively straightforward may have been auto-assessed by Sars and even have received tax refunds owing to them.
The automated assessment system, which has been in operation for several years, has greatly reduced the administration burden for taxpayers and Sars, but it has increased the burden for “third parties” such as employers, medical schemes, banks and investment houses, who need to submit details of what you have earned, paid in medical expenses, and contributed to retirement funds over the tax year. All the details from the third parties would have been pre-populated on your electronic return.
It is important that if you have been auto-assessed, you go through your pre-populated return and subsequent assessment to ensure all the details are correct and nothing has been left out. You may also want to claim for expenses that may be tax-deductible that have not been recorded on your return.
PAYE taxpayers whose affairs are more complicated and have not received notification from Sars that they are being auto-assessed must file their returns.
Last year, taxpayers who had been auto-assessed were granted 40 business days from the date of the auto-assessment to revise their returns if they needed to amend them. This year, Sars has extended this revision period to coincide with the normal filing due date for non-provisional taxpayers, which is October 23.
If the assessment shows that you owe Sars money, it must be paid within 30 days after the deadline of October 23 if you have been auto-assessed, or within 30 days of receiving your assessment if you were not auto-assessed.
Provisional taxpayers are people who have multiple sources of income and include self-employed people and retirees. They have three deadlines to worry about
- Calculation and payment of provisional tax for the first half of the 2023/24 tax year, due by August 31.
- Calculation and payment of provisional tax for the second half of the 2023/24 tax year, due by February 29, 2024.
- Return for the 2022/23 tax year, due by January 24, 2024.
The auto-assessment system does not apply to provisional taxpayers; they must complete and file their returns.
Exemptions, rebates and tax credits
Exemptions are deductible from your taxable income, while tax rebates and medical tax credits are deducted by Sars from the assessed amount of tax you owe for the year. The following apply to the 2022/23 tax year (the year for which you are filing a return):
Rebates for individuals: The primary rebate for all individuals is R16 425; the secondary rebate for people of 65 and older is R9 000, and the tertiary rebate for people of 75 and older is R2 997. (For example, a 76-year-old taxpayer’s rebate is R16 425 + R9 000 + R2 997 = R28 422)
Exemptions on interest: Taxpayers under 65 years are not taxed on the first R23 800 of interest earned from interest-bearing accounts over the year. The exemption is R34 500 for people of 65 and older.
Medical tax credits: On medical scheme contributions, you can claim up to R347 a month each for the principal member and first dependant and up to R234 a month for each additional dependant. You can also claim a credit for 25% of the amount that exceeds 7.5% of your taxable income which comprises (a) qualifying medical expenses not covered by your medical scheme and (b) medical scheme contributions that exceed four times your medical scheme tax credit for the year. People with disabilities and taxpayers over 65 are entitled to a credit of a third of their qualifying medical expenses and a third of medical scheme contributions exceed three times their medical scheme tax credit for the year.
For more details, consult the Sars website (www.sars.gov.za), the source of information for this article.
*Hesse is the former editor of Personal Finance