The South African Revenue Service (SARS) will soon open the 2023 tax season for taxpayers to file their income tax returns for the 2023 assessment year; however, not all taxpayers are required to do so.
Income tax season begins July 7, 2023 and lasts through October 23 for individual taxpayers and January 24, 2024 for non-preliminary taxpayers:
Private taxpayers (non-provisional): July 7, 2023 @ 8:00 PM to October 23, 2023 Provisional taxpayers: July 7, 2023 @ 8:00 PM to January 24, 2024
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Tax season can be an incredibly stressful time for individuals and businesses, with taxpayers who fail to file their returns on time facing penalties.
However, not all taxpayers are required to file income tax returns PwC provide a detailed breakdown of those who do and do not.
Taxpayers who do not have to file a return
A natural person – or the estate of a deceased person – does not always have to file an income tax return if his or her gross income consists of one of the following elements:
Remuneration of not more than R500,000 from any one source and employee tax has been withheld in respect of that remuneration; South African source interest income (excluding a tax-exempt investment) of up to: R23,800 for an individual under the age of 65; R34,500 for a person who is 65 years old
or older; or R23,800 for the estate of a deceased person; Dividends when the person was a non-resident during the tax year; Amounts received or accrued from tax-free investing A one-off lump sum received from a pension fund, provident fund, pension retention fund, provident fund or annuity fund and tax has been withheld on the basis of a tax directive.
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However, these exemptions do not apply to persons in the following circumstances, for example if a person:
allowances/advances paid or granted in respect of business travel, accommodation or subsistence; granted taxable benefits related to the use of a motor vehicle; or any amount received from or accrued in respect of services rendered outside South Africa.
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SARS has established that a natural person does not have to file an income tax return if he has been notified that he is eligible for an automatic assessment.
No action is required if the taxpayer’s gross income, exemptions, deductions and rebates, as automatically assessed, are complete and correct.
Car ratings are expected to roll out on June 30, 2023.
If taxpayers do not accept the automatic assessment, they must file a return. SARS gives until the due date of October 23, 2023 to do so.
Taxpayers who must file a return
However, many taxpayers in South Africa will still have to file their tax returns – here are the criteria:
Any resident corporation or resident juridical entity which, during the assessment year: had a gross income of more than R1,000; assets held with a cost in excess of R1,000 or liabilities in excess of R1,000 at any time; derived a capital gain or loss of more than R1,000 from the sale of an asset; or had taxable income, taxable turnover, taxable loss or taxable loss. Any non-resident company, trust or other legal entity that: conducted business through a permanent establishment in South Africa; derived income from South Africa; or derived a capital gain or loss from the sale of an asset. Any company incorporated/incorporated in South Africa which, as a result of an applicable double taxation agreement, is not a resident of South Africa. Any natural person who: was a resident and traded (other than as an employee only); was not resident and engaged in trade in South Africa (other than solely as an employee); was resident and had capital gains or losses in excess of R40,000; was not a resident and had capital gains or losses from the disposal of assets; was resident and held foreign currency or assets outside South Africa totaling more than R250,000 at any time in the year; was a resident to whom any income or capital gains were attributed; was a resident of and held any participation rights in a controlled foreign company; was a resident and had taxable turnover; or at the end of the tax year: was under 65 years of age and had a gross income of more than R91,250; was 65 years of age or older (but under 75 years of age) and had a gross income of more than R141,250; was 75 years of age or older and had a gross income of more than R157,900. Estates of deceased persons with a gross income. Any non-resident with interest income from South Africa if: the person is a person who has been present in South Africa for a total of 183 days in the 12 months before interest is received or accrued;
or the debt from which the interest arises is attached to a permanent establishment of the person in South Africa. Any person requested in writing by SARS to file a report (regardless of person’s income/nature of receipts/accruals). Each representative taxpayer of one of the persons listed above.
PwC said taxpayers should make sure they pay attention to SARS deadlines to avoid penalties.
In addition, PwC said everyone in the auto-assessment population should make sure they pay attention to the auto-assessment process and determine whether to file a return.
Read: SARS fines expats even if they don’t owe taxes – here’s what to do