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income tax
According to The Income Tax Act No. 58 of 1962, individuals who earn above the outlined threshold must register for personal income tax. As a registered taxpayer, you are required to submit annual income tax returns to ensure compliance with all relevant legislation. These submissions can be made through your nearest SARS branch or online via the eFiling system.

When submitting tax returns, it is advised for taxpayers to seek the advice of tax professionals to ensure complete compliance, as these submissions must comply with relevant regulations and submitted in time to avoid hefty penalties. The income tax year closes on the last day of February each year, which means that the 2022 income tax year is nearing!

Does SARS require substantiating documents for annual return filings?

Section 29 of the Tax Administration Act outlines that taxpayers must retain their records for up to five tax periods, should SARS need further information for confirmation. However, based on their declared tax return information, taxpayers are frequently perplexed by the documents they should retain for filing purposes. We have outlined some of the most common confusions:

  1. Home office tax deductions

Individuals who work from home can include deductions for home office expenses should they have an office in their space solely for their trade. Salaried employees can only benefit from this deduction if more than fifty percent of their work duties are completed in this space. SARS requires the following information from qualifying taxpayers:

  • The square meterage of the home office space in correlation to the entire home.
  • Relevant rental expenses
  • Relevant bond statements

Employees who receive a commission can benefit from the following deductions, should more than fifty percent of their duties be performed outside of their physical office:

  • Phones
  • Internet
  • Stationary
  • Office equipment
  • Cleaning
  • Rates and taxes
  1. Rental income and expenditure

Gross income includes income received by the taxpayer. In the case of rental income, rental agreements need to be provided as proof of earnings. Any expenditure incurred in relation to earned rental income should be in accordance with the General Deduction Formula.

Taxpayers are allowed to benefit from the following deductions, with the necessary substantiating documents:

  • Property agent invoices
  • Electricity
  • Municipal bills
  • Bond statements
  • Invoices for necessary repairs and maintenance
  • Levy statements
  1. Income as a result of foreign employment

According to Section 10 of the Income Tax Act, taxpayers are allowed an exemption in income tax according to the number of business days spent out of the country. The qualifying period for this exemption requires individuals to have spent 183 days, or more, outside of South Africa within the 12 months of the concerned tax period, of which 60 days were continuous.

Taxpayers are required to prove their whereabouts and should hence keep the following information:

  • Calendar schedule
  • Copy of passport
  • Relevant employment contract
  • Payslips
Assessments conducted by SARS

The taxpayer will receive an Original Assessment from SARS when submitting a tax return. Should SARS ever wish to query the information you have declared on your tax return, you will receive an Additional Assessment. Taxpayers have the opportunity to file an objection, should they disagree with the information recorded in these assessments, within 21 business days after the assessment date.

To avoid the chance of being incorrectly assessed by SARS, taxpayers should endeavour to submit accurate income tax returns. We offer leading tax consultancy services for assistance with personal income tax to achieve this. Our team will guide you towards compliance and ensure a smooth tax submission. Reach out for more information.

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