• Expert Advice

It is tax season for individuals and entities such as trusts, institutions, boards and bodies and it kicks off on 1 July 2018. To stay on good side of the South African Revenue Service (SARS) here’s what you need to do:

Get your supporting documents together now. Depending on how complex your tax affairs are, you may have to collect documents from multiple sources to prepare your tax return.

Examples of documents to collect you may require include:

• IRP5 certificates from your employer reflecting your income and your tax deductions.
• Certificates from your banks, retirement annuity providers and investment firms reflecting your interest earned, capital gains and/or losses, and retirement funding contributions throughout the year.
• Any medical aid contribution certificates and receipts.
• A vehicle logbook if you receive a travel allowance, use a company car or wish to claim travel expenses against income earned during the year. SARS recommended template
• Section 18A Certificates for donations made to registered charities and non-profit organisations.
• Details about any income you earned on top of your salary (freelance work or rent), and any expenses you are claiming against this income (such as phone costs, inventory, travel).
• Financial statements, should you be a sole proprietor.
• All information relating to capital gain transactions, such as sale of a property or business.

If you are self-employed, operating as a sole proprietor rather than a registered company, you will file a personal income tax return. You must file bills and invoices for any expenses you plan to claim should SARS select you for an audit.

Finally, file as early as you can. Filing your personal income tax return can be time-consuming and you should leave time for snags such as requests for further paperwork or information. Filing early can reduce the stress of compiling paperwork – it’s not something you want to leave until the last day.

Important deadlines

Deadlines are as follows:

• Non-provisional taxpayers have until 31 October 2018 to file their annual income tax returns.
• Provisional taxpayers who use eFiling have until 31 January 2019 to file.
• Both provisional and non-provisional taxpayers that submit manually at a SARS office must file returns by 21 September 2018.

And don’t forget the youth this youth month

Once you’ve done your own tax planning, you might want to spare a thought for the youth, when planning your coming year.

Over five million (or 42%) of those under age 30 are unemployed. Research shows that the longer an individual remains unemployed, the less their prospects are to never find a job. Youth unemployment is one of the cancers of South African society. With its correlations with social unrest, extreme poverty and crime, it is not hyperbolic to think of it in terms of a potentially terminal ailment.

To address youth unemployment, government in 2014 introduced the youth wage subsidy to encourage employment of youth. It has since been extended and is a way for franchisees to receive a subsidy for employing young people. The incentive is intended to provide work to more young people.

How to qualify for youth employment incentive

All private employers registered to pay employees’ tax to the South African Revenue Service (SARS) qualify. This of course includes franchisees, who are able to deduct the incentive amount for which they qualify from the employees’ tax they would have to pay to SARS.

Franchisees will be able to claim the incentive for a 24 month period for all employees who qualify. Franchisees can only claim the incentive in the case of employees who are:

• Between 18 and 29 years old;
• Have an identity document or an asylum seeker permit.

This incentive is not applicable to domestic workers.

During the initial year of employment, the amount which could be claimed is half of what employees earn for those who earn R2 000 a month or less, and R1 000 for employees earning between R2 000 and R4 000. For employees earning between R4 000 and R6 000 as the salary increases the amount declines, according to a formula. By way of example, R500 can be claimed for someone earning R5 000, while for someone earning R6 000 or more nothing can be claimed. During the second year the incentive declines by half.