Consider complex tax items carefully before submitting via SARS e-Filing
4 August 2010 | Category: Tax
While SARS’ online tax submission system – SARS e-filing – has made tax submissions a whole lot simpler, business owners and large investors need to ensure that the more complex focus areas of their activities are appropriately addressed when submitting returns online.
“The implications of submitting the more multifaceted tax items incorrectly can be detrimental to taxpayers, with inflated amounts inaccurately being paid to SARS,” says Neville Sweidan, a tax partner at Grant Thornton Johannesburg.
The 2010 tax filing season officially opened on 1 July 2010. The deadline for electronic submissions on e-filing is 26 November 2010 as opposed to the postal submissions deadline which is 30 September 2010. The deadline for people or trusts which are classified as provisional tax payers is extended to 31 January 2011.
“Company tax returns differ significantly, however, from those applicable to individuals with the submission deadline only 12 months after the company’s financial year end,” adds Sweidan. He warns that details relating to foreign income, capital gains or losses, local farming, non-taxable considerations or local business, trade and professional income can become complicated issues to submit correctly online.
In terms of income earned outside of South Africa’s borders, often a withholding tax has been deducted by the foreign institution. “In certain circumstances, the withholding tax is deductable from SA taxes payable – which could result in a significant saving for the taxpayer,” says Sweidan.
Capital gains and losses is also a complex section of the tax legislation and it’s important to have all the necessary information at hand in order to claim the appropriate base cost or exclusions. “Skilled tax advisers can assist particularly with complicated capital gains issues and final submissions to SARS,” he adds.
Another tax complication can arise when individual taxpayers experience a sudden increase or decrease in net assets, which is reflected in statements of assets and liabilities arising from non-taxable receipts or losses. “It is very important to explain the reasons for the increase or loss to SARS appropriately,” warns Sweidan. “Failure to do so can result in exasperating queries and delays in receiving correct assesments.”
SARS is very strict on deadlines as well as whether an individual’s personal particulars on record are accurate. Sweidan warns that penalties for inaccurate personal details or late submissions can range from R250 to R16,000 a month, depending on the category of the taxpayer which is determined by the individual’s taxable income.
“Using SARS e-filing to submit your company and personal tax returns on time and accurately is certainly a whole lot more efficient, but it may require some careful preparation and research beforehand, to confirm all data is correct, thus limiting the need for amendments later on,” concludes Sweidan.
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