Who needs to register for income tax?
The South African Revenue Service (SARS) requires everyone who receives employment income, including those below the tax threshold, to register for income tax.
Who is required to submit an income tax return to SARS?
Everyone who earns an income is required to submit a completed and signed income tax return to SARS, unless they meet all of the following requirements (according to SARS’ current practice):
- They earn an income of less than R 120,000 for a tax year (i.e. from 1 March to 28 February)
- Their full income is earned from one source (i.e. the Allan Gray Living Annuity)
- Their income does not include any other allowances or deductions
For the 2012/2013 tax year, the taxable income threshold for individuals on which no tax is payable is as follows:
- Below age 65 R 63,556
- Age 65 and below 75 R 99,056
- Age 75 and over R 110,889
Once these thresholds have been exceeded, the specific rates at which individuals are taxed depend on the amount of taxable income received. A year of assessment for an individual consists of twelve months starting from 1 March and ending on the last day of February of the following year.
What is an income tax return?
This is a declaration of income earned and capital gains or losses realised in a tax year (i.e. from 1 March to 28 February). If your clients are required to submit an income tax return (see above requirements) they will need to complete and file a tax return each year during SARS’ tax filing period. More information on the filing period and processes is available at http://www.sars.gov.za.
Dividend Withholding Tax
Dividend Withholding Tax (DWT) came into effect on 1 April 2012. It is a withholding tax that falls outside of the normal tax rules (i.e. the rules that govern the calculation of an individual’s personal income tax return calculation). Dividends are taxable in the hands of the investor for dividends tax purposes, but remain exempt for income tax purposes.
We are required to deduct DWT at the applicable rate (e.g. 15%) from the value of your clients’ dividends and pay it to SARS. The way in which your clients complete their income tax return is not affected in any way. They should include all local gross dividends they have received in the ‘exempt dividends’ field on their income tax return.
Which tax certificate will you receive?
| Tax certificate or statement | Tax certificate description | Product |
|---|---|---|
| IRP5 / IT3(a) | This certificate is used to report:
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| IT3(b) | This certificate is used to report interest and dividends for local and offshore investments. |
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| IT3(c) | This certificate is used to report capital gains and losses for local and offshore investments. |
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| Offshore annual statement | This statement can be used to calculate capital gains and losses. It is issued to investors who cannot receive an IT3(c) because of insufficient transfer details regarding their weighted average unit cost supplied from their transferring company. | Investments on the Allan Gray Offshore Platform |
| Retirement annuity fund contribution certificate | This certificate provides a record of retirement annuity fund contributions made during the tax year. | Allan Gray Retirement Annuity Fund |
Taxpayer season
The 2013 taxpayer season will commence on 1 July 2013. The deadlines are as follows:
- 1 July 2013 – 27 September 2013 (for non-provisional and provisional taxpayers who submit their tax returns manually)
- 1 July 2013 – 22 November 2013 (for non-provisional taxpayers who submit their returns via eFiling)
- 1 July 2013 – 31 January 2014 (for provisional taxpayers who submit their returns via eFiling)
