Personal investing

Do I need to file an income tax return for the 2021 tax year?

The South African Revenue Service (SARS) continues to focus on introducing online and digital services, simplifying the tax-filing process, and making it easier for taxpayers to comply. As tax season opens, Liezl Alberts, tax specialist at Allan Gray, helps investors figure out if they need to file a tax return and how to go about it.

Filing season opened on 1 July 2021, with a significant number of taxpayers being assessed automatically. Below we provide key dates to diarise and provide answers to some frequently asked questions.

Key dates to diarise:

Will SARS auto-assess taxpayers this year?

SARS introduced the auto-assessment process in 2020 in response to COVID-19, to simplify the tax-filing process and to remove the need to visit branches. This year, SARS will again use certain information from third-party data providers, such as Allan Gray, to prepopulate tax returns, both for individuals selected to be auto-assessed and those who are not. In the last tax year, prepopulated data included IRP5/IT3(a) employer information, income earned from investments, tax-free savings information, retirement annuity fund contributions and medical aid contributions.

What do you need to do if you are auto-assessed?

If you are selected to be auto-assessed, you will be directed via SMS to eFiling or the SARS MobiApp to view your return. If you accept the auto-assessment results, you do not have to complete a tax return because SARS would have done that for you. If you are due a refund, SARS will pay the refund to you as per normal, as long as SARS has your correct bank details on record. If you owe SARS money, you can make payment as per the normal process on eFiling, via EFT or the SARS MobiApp.

The accuracy of data in your return depends on whether third parties, like your employer and other financial institutions, have your latest details. It is important to check that all the prepopulated third-party information displays correctly on your tax return before you accept your auto-assessment. This means you need to carefully check your tax certificates from your employer, medical aid provider and investment managers and compare these to the information prepopulated in your auto-assessment.

When should I not accept the auto-assessment from SARS?

If you have additional deductions to claim, or income to report that has not been prepopulated in your auto-assessment, you should not accept your auto-assessment and should edit the information before submitting it to SARS. Examples include realised capital gains from the sale of assets, rental income, excess medical expenses which were not covered by your medical aid, or a tax deduction for home office expenses.

Some information may not be editable, such as information received from your employer. Where you are unable to edit the information, you will need to approach the relevant third-party provider to process a correction and resend the data to SARS.

The onus is on you, the taxpayer, to ensure income is declared correctly, even where the information is not prepopulated by SARS. Not fully declaring all your income can result in administrative non-compliance penalties.

Do all South Africans need to file a tax return?

Who is exempt?

Not everyone who has earned income and paid tax during the 2021 tax year needs to file a tax return. As an individual, you are only liable to pay income tax if you received taxable income (income after exemptions and deductions have been applied) which is more than a specific amount (known as the “tax threshold” amount) for the tax year.

For the 2021 year of assessment, the tax threshold amounts are:

SARS states that, as an individual South African tax resident, you do not need to submit an income tax return for the 2021 year of assessment if:

    1. South African sourced interest (not from a tax-free investment) less than:
      • R23 800 for individuals below age 65
      • R34 500 for individuals age 65 and older
    2. Amounts received from a tax-free investment
    3. Remuneration not exceeding R500 000 from only one employer and the employer deducted the required tax

Who must file?

If you are a South African tax resident and you earned above the tax threshold amount, you will need to file a tax return if you had more than one employer or income source (for example you changed jobs during the tax year or worked two jobs, you earned rental income or you earned extra income from a side business). The same applies if you received a taxable allowance or advance from your employer (for example a travel, subsistence, computer or cellular allowance or if you had the right to use a motor vehicle supplied by your employer).

In some instances, as a South African tax resident, you may be required to file a tax return regardless of whether your taxable income exceeded or was less than the tax threshold amount.You will be required to file a tax return for the 2021 tax year if any of the following applies:

Do non-South African tax residents need to file a tax return?

If you are a non-South African tax resident, SARS states that you do not need to file a tax return if you only received dividends from a South African source and you were a non-tax resident for the duration of the 2021 tax year. However, you will be required to file a return if any one of the following applies:

Contact SARS for more information

For more information regarding your tax submission, please contact SARS directly on 0800 007 277 or visit www.sars.gov.za.

The financial services, products or investments referred to on this website are not available to persons resident in jurisdictions where their availability or distribution would contravene local laws or regulations and the information on this website is not intended for use by these persons. This website is for information only and does not in any way constitute a solicitation or offer by Allan Gray Proprietary Limited or any of its associates or subsidiaries (collectively “Allan Gray”) to buy or sell any financial instruments or to provide any investment advice or service.

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