• With only a month to go until this year’s Filing Season opens,it’s worth your while starting to gather your paperwork now.


FILING YOUR annual income tax return has become a lot easier in recent years.

All you need to do nowadays is to open the SARS e-filing web page, log in with your credentials, and request the current year’s tax return. Once you’ve opened the return, you’ll find the form pre-populated with your personal details, followed by your IRP5 certificate from your employer, interest earned from your investments, your medical scheme details, and even your retirement annuity contributions.

A quick look through, click on ‘File’, and that’s you done with your income tax return until next year. As easy as falling off a Harley-Davidson, right? Well, not quite …

The system works quite well, provided that everyone in the food chain of institutions now required to make electronic submissions to SARS has captured your data accurately and completely. Unfortunately, this is seldom the case, for a variety of reasons:

  • Outdated information

In an ideal world, everyone would go to great lengths to ensure that their in-formation is fully updated whenever circumstances change, with whoever holds such information. However, here in the real world, there is no such thing as a complete set of perfect data. For the most part, we tend not to update our data as regularly as we should, mainly because (a) it’s an absolute pain to do so, and (b) outdated data often doesn’t affect us too much.

Just think of the hassle involved in getting into a branch office, the queues that you have to stand in once you get there, and the apathy of the staff member entrusted with correctly capturing the updated information. Besides, most people wouldn’t be too bothered if their employer has incorrect address details on their payroll files, as long as they still get paid. Likewise, if your ID number or tax number is incorrectly recorded by your bank, who cares as long as your card still works at the ATM and you can still log into your phone app to check your balance?

What this means is that this pool of imperfect, outdated data is where the submissions that are uploaded to SARS are drawn. You therefore cannot take it for granted that the pre-populated data in your return will be accurate.

  • Incomplete information

Consider the scenario where you have savings accounts with a number of institutions. The ones that you’ve had for a long time may well have old address details, and could even have the last three digits of your ID number incorrect—these digits once contained a race indicator, and were thus changed once apartheid was abolished.

Some of them might not have your income tax number, since this was not a requirement when opening a savings account in years past, or you might not have had a number when the account was opened.

The upshot of this is that the information uploaded to SARS will probably be incomplete. The risk of simply accepting the pre-populated information is that you are likely not to have fully declared your income—something that SARS views in a dim light and penalises heavily.

  • Missing information

While a lot of your information is now uploaded electronically, there is often far more that needs to be entered manually. Examples include income from rental properties, business or trade income, capital gains from the sale of assets, medical expense claims, business vehicle expenses claimed against a travel allowance, and donations to approved institutions.

Depending on your circumstances, the likelihood of either paying too little tax (by omitting taxable income) or too much tax (by omitting tax-deductible expenses) is high. You will end up with the unpleasant prospect of facing interest and penalties, or the equally unpleasant prospect of having to submit an objection to your SARS assessment. Both of these can be time-consuming, not to mention expensive.

As tempting as it may be to simply trust the pre-populated information and submit your tax return without so much as a cursory glance, don’t take the risk!

Unfortunately, the only way that you can ensure that your return is complete and accurate (as you have effectively declared to SARS by clicking ‘File’) is to request the necessary paperwork from the various institutions with whom you deal.

… you are likely not to have fully declared your income—
something that SARS views in a dim light and penalises heavily

Examples of what you need include the following:
– Salary or pension: An IRP5 or IT3(a) certificate from your employer or pension fund. If you have more than one source of income from these streams, you need a separate certificate covering each source.
– Investment income: An IT3(b) certificate from the financial institutions that hold your investments. Make sure that you receive certificates covering every account held by every institution with whom you invest.
– Capital gains (financial institutions): An IT3(c) certificate from the institutions concerned. This certificate should show the base cost and sale proceeds as a bare minimum.
– Capital gains (other assets): If you have sold a property, for instance, you need to be able to substantiate the base cost, the proceeds, and any selling costs incurred. Documents making up the base cost include the original purchase agreement as well as receipts for any amounts spent on improvements. The proceeds, legal fees, and any agent’s commission will normally appear on the conveyancer’s final statement, but other costs (e.g., advertising) may have separate invoices.
– Retirement annuity contributions: The fund should provide you with a certificate showing the necessary details. It is important to compare these to the pre-populated information on your return, especially if you contribute to more than one fund.
– Medical expenses: Your medical scheme will provide a certificate showing the number of members and dependents, scheme contributions, and submitted claims not covered by the scheme. Medical expenses not submitted to your scheme will need to be substantiated by receipts for each expense.
– Business vehicle expense claims: You would need your vehicle purchase / lease agreement, as well as your logbook. If you are claiming actual costs rather than using the tables, you will need all your receipts for fuel, maintenance, parking, tolls, insurance, tyres, and repairs.
– Donations: Only donations made to approved Public Benefit Organisations are claimable against taxable income. You will need a certificate compliant with Section 18A of the Income Tax Act to substantiate the donation amount claimed.

With Filing Season opening on 1 July 2021 and there being a relatively short window in which your return needs to be submitted to SARS, it’s worthwhile starting to gather your paperwork together now. If there are any errors on the documents provided, you would need to request the institution concerned to correct these—as taxpayer, you will not be able to amend any pre-populated data on the return itself.

It’s a good idea to make scanned copies of all of your supporting documents. While you are not required to submit these with your return, SARS is likely to perform a verification of your return once submitted, and will require you to upload your documents via e-filing.

Also, since you are required to retain your supporting documents for five years after the assessment and any verification / audit process has been finalised, it’s a lot safer and more convenient to hold these in electronic form—provided that you back up your computerised records!

Steven Jones is a registered SARS tax practitioner, a practicing member of the South African Institute of Professional Accountants, and the editor of Personal Finance and Tax Breaks.