With four days to go before the tax return deadline of July 8, the South African Revenue Service (SARS) must emphasise the importance for individual taxpayers to declare all income received from multiple sources, including businesses and ad hoc work, investments and property rentals.
It is important that transparency, in the form of accurate and complete declarations of all income streams must be demonstrated by taxpayers. On signing the tax return, the taxpayer declares that the information and supporting documentation are true and that it discloses in full income from sources within and outside South Africa for the 2005 year of assessment.
Misrepresentation, neglect or omission to furnish all information could lead to penalties, additional assessments or even prosecution.
With regard to business and rental income, taxpayers should complete the relevant schedules as fully as possible. SARS requires sufficient information, which should avoid the need for any queries from SARS.
Pay as You Earn (PAYE) employees in receipt of an annualised salary of more than R60 000 per year (after deductions of contributions to pension funds and retirement annuities) should be registered taxpayers. In addition, a person earning investment income (interest) of more than R11 000 per year, rental income, business income or a person who receives a travel or public office allowance as part of their salary must all be registered, as well as members of Close Corporations and Directors of Companies.
Taxpayers should accurately transfer details contained in their IRP5 to the relevant sections in their tax return. This is the document which all employers are required to issue to employees from whom they have deducted Pay as You Earn and Standard Income Tax on Employees. It records details of all earnings, allowances and deductions. For all these steps skilled taxpayer consultants are available at any SARS branch office throughout the country.
If tax is deducted from employees during the fiscal year, an employer is obliged to issue an IRP5 to an employee or contract worker. Therefore, individual taxpayers could be in receipt of more than one IRP5 if they have multiple income streams.
Investment income is interest income, both local and foreign, and foreign dividends. Such income is generally derived from an investment with a financial institution such as a bank or unit trust administrator. Taxpayers who benefit from investment income will receive a certificate from their investment manager providing the information which must be included on the tax return. It will list interest earned from savings accounts, fixed deposits and unit trusts. Retirement annuity certificates must be included with the tax return.
Taxpayers under 65 years of age may earn domestic and foreign interest, and foreign dividends of up to R11 000 per annum tax-free. This sum rises to R16 000 for taxpayers who are 65 years of age and older. Foreign interest and taxable foreign dividends are exempt up to R1 000 of the total exemption amount. Taxpayers must, however declare the gross amounts, as the exemption will be applied programmatically by SARS during assessment.
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PRETORIA