Fine-tuning by the taxman will make e-filing even easier.
In June this year, the South African Revenue Service (SARS) extended its e-filing facility to allow individual taxpayers to submit their tax returns online.
Apparently, about 50 000 taxpayers have already registered to use this free service. The service applies only to individuals who receive salaries, with or without allowances, or pensions. These people have in the past received an IT12S or IT12SS tax return.
People who receive investment income and fill in an IT12SB return, or who derive business or farming income and fill in an IT12BU form cannot complete an online return. SARS says the e-filing of these returns is being analysed, and after this analysis has been completed a date on which taxpayers will be able to complete these returns online will be released.
To e-file, you must have a working email address or a cellphone number, and a tax reference number. If you are not registered as a taxpayer, you cannot register online and will have to go to a branch of SARS. It isn't necessary to have access to the internet at home or at work to e-file, because you can use the electronic services desk at one of a number of SARS branches.
According to SARS, you don't need any special software to use its e-filing site, but a reasonably up-to-date browser will probably help.
Before you can start e-filing, you must register for the service at ( www.sarsefiling.co.za).
Registering for e-filing involves printing out a page from the site and faxing it to SARS with a copy of the first page of your identity document. You also need to select a user identity (to which SARS will add four characters for security purposes) and a password.
SARS says registration can take up to 24 hours. When I tested the site, I was registered in an afternoon, but don't bank on that, especially if you plan to register and complete your return hours before the submission deadline. In addition, the site warns that it can take up to five days for an electronic tax return to be issued. Again, that wasn't my experience, but be warned that it could be yours.
If you are running out of time before a tax return deadline, the site allows you to apply for an extension online, but first check out the rules that apply to extensions, which are also outlined on the site.
Once you have registered, you need to wait for notification by SMS or email that your registration has been successful. Once you have been notified, you can revisit the e-filing site, log in and access your return, but don't expect to get going in a hurry. Before you begin, you need to plough through a very long list of terms and conditions.
Beyond this, if you have been completing your own return in the past, things will begin to look familiar. First, there is the section dealing with your personal details. Filling in this is relatively straightforward.
Next you need to fill in details about your income, including the numbers of your IRP5 and IT3 certificates, so don't forget to have them at hand.
If you e-file, you won't need to submit any of the supporting documents, such as your IRP5 or IT3S, you usually have to attach to your return. However, you must keep all your documents for at least five years and be able to produce them if SARS asks for them. SARS says it will call for supporting documents to substantiate any claim as part of its audit procedures, and not necessarily because it regards your claim as excessive.
There are sections in the online return to complete for rental and interest income, and capital gains or losses. I found the capital gains section a little less than user-friendly when I tested it by entering details for a gain on a primary residence.
Knowing that an exception on capital gains of up to R1 million for the 2005/6 tax year and R1.5 million for the 2006/7 tax year is available, you may be eager to enter this in the field marked "Primary residence exclusion", but you will find you cannot. Although there is no indication that you cannot fill in this field, it appears that it will be filled in for you automatically once you have specified the type of asset on which you have realised a loss or gain. When you complete this, you'll find a drop-down menu from which you can select "Primary residence". On doing so, the relevant exempt amount will be filled in the field marked "Primary residence exclusion".
Travel expenses
Similarly, at the travel expenses section, I expected the online return to make things much simpler for me. And to some extent it does. It saves you adding up the deemed expenses for fuel, maintenance and fixed costs and multiplying them by your business mileage.
But to arrive at the business mileage, you first need to fill in your odometer readings for the start and the end of the tax year, whereafter your total mileage is calculated for you, and then you need to fill in the kilometres you travelled for private purposes. Well, who knows how much private mileage they did? Only if you are using the deemed mileage will you be able to fill in quickly and easily that you did 18 000 km in private travel. If you kept a log book, however, you are likely to know the total mileage you did for business purposes, and so it would be helpful to be able to fill in this, rather than use this mileage to calculate your private mileage, in order that the business mileage can be determined by the online return.
I also felt a little lost after filling in details of my vehicle and my mileage and not immediately being taken to the calculation of the deduction. In order to enter the details relating to the deduction, you need to return to the travel expenses section and click on "Add travel claim".
Next, you will need to fill in your medical deductions, and you will need your medical scheme membership number to complete the section on scheme contributions and expenses not covered by your scheme. Likewise, you will need details of your pension and provident fund contributions to complete the section for these deductions.
To claim a deduction for contributions you made to a retirement annuity and premiums paid to an income protection policy, you will need the policy numbers.
The last sections of the online return require answers to questions about donations, disposal of property and trusts.
Before you hit the "Submit" button and declare that everything you have filled in is true and correct, you can preview your return, which now looks just like the paper version, only with all your details filled in. At this stage, you can make a copy of the return or print it for your records.
If you do not manage to complete the return in one session, you can save the details you have entered so far and log off. When you are ready, you can log on to the site again, find your return and quickly skip to the sections you still need to complete.
Once you have submitted your return, you should receive confirmation that SARS has received it, either by SMS or email, depending on which communication channel you initially selected.
Any return submitted electronically can be accessed on the site for the next five years.
SARS says the average assessment time for e-filed returns is now four weeks, but this will depend on you filling it in correctly.
But if you can't wait that long to find out how much you owe or are owed, log out and return to the e-filing home page. On this page you will find a "Tax calculators" link. To use the calculator you need to have the Java Runtime Environment enabled. If you don't, this can involve something of a time-consuming download, but once you are through this, if you re-enter your details, the calculator will establish what tax you owe, or what is owed to you.
It would be really useful if the information you provide in your online return was transferred into this calculator and, on completion of the return, you could immediately check how much you owe or are owed.
But SARS is aware of this, and says it does plan to link the calculator to the return. This should be ready in time for filing season next year.
Electronic payment
After submitting your return electronically, you will be sent a notice of assessment electronically. If you owe SARS tax, you can proceed to the payments section of the e-filing site and set up instructions to the bank of your choice to pay the tax you owe.
Once that's done, you can relax for another year. Then look out for an email in your inbox informing you that your next return is online, rather than a large SARS envelope sticking out of your post box.
- SARS has developed a calculator to assist you if you want to use the time-apportionment method of calculating the base cost of an asset in order to determine the capital gain or loss you have made on assets you dispose of. The calculator uses a Microsoft Excel worksheet and can be found on www.sars.gov.za. Choose "CGT" from the "Taxes" drop-down menu and then "Publications". However, it is in draft form and was published with an invitation for comment. It may, therefore, still be tweaked.
This article was first published in Personal Finance magazine, 4th Quarter 2006. See what's in our latest issue