Most of us are guilty of leaving our tax filing to the last-minute; either because we are required to decode SARS deadlines and decipher these or because we lean on the side of procrastination. According to Ruan van Jaarsveld, tax specialist at Hobbs Sinclair Advisory, despite regular reminders, a surprisingly large number of taxpayers leave their tax matters to just before the deadline date and find themselves in a frantic spin, searching for documentation to support a tax-smart submission. Sound familiar?
“The fact of the matter is that not taking your tax return seriously is simply bad financial planning,” says van Jaarsveld. “There are plenty of quick and easy habits you can adopt that will streamline your admin load and result in you receiving an accurate and healthy tax reimbursement of your hard-earned money.”
Personal monthly accounting
According to van Jaarsveld, it’s as easy as downloading your monthly bank statement as a CSV file, exporting it into a spreadsheet, and processing and allocating each transaction to an expense. “By the end of the tax year, you will have a full set of records ready to support your tax return,” he says.
Keep the slip
Such an easy habit, but one that is frequently ignored. More and more individual taxpayers are finding themselves being audited by SARS. “You’ll find yourself in a fiddle if you are unable to provide supporting invoices and slips for your expenses.” Van Jaarsveld suggests a clever hack; “Create a WhatsApp group for yourself and your partner (you can delete your partner after you’ve created it) and take a photograph or screenshot of each purchase slip, before popping it in a message on the group. In this way, you’re creating one place to store your expenses and circumventing the hassle of sifting through shoeboxes or flip files in futile searches.
Use the tech
Most banks offer solutions for business accounts allowing integration or plug-in to accounting systems such as Pastel or Xero. These clever time-saving additions can automatically populate, import and allocate your expenses into your software system.
There are also applications available such as 22seven which facilitate expense recording and accounting. Keeping a log of your travel expenses and fuel consumption has also been made significantly easier for tech-savvy individuals. There are numerous applications available to download that assist in keeping a travel log – some of them auto-track your kilometres and fuel usage too.
Check your tax status
Make sure you confirm your details on SARS’s e-filing website and while you are at it, check that all your information is correct and verify your bank account details.
Check your automated assessment claims
Taxpayers will now be au-fait with SARS’s auto-assessment system whereby tax contributions are automatically calculated based on data SARS receives from employers, financial institutions, medical aid schemes, retirement annuity fund administrators and other 3rd party data providers. This means that you are relying on these institutions to provide the correct information.
Often medical expenses are omitted from an auto-assessment if these haven’t gone through the claims process of your medical aid. For example; a person on a hospital plan who visits the doctor will pay cash for the consultation and prescribed medicine and therefore the amount will not be recorded as an expense by the medical aid and in turn SARS, who usually receive the information from your medical aid.
You can’t overdo it
Rather provide your tax advisor or accountant with too much information than not enough. In that way you’re equipping the experts to submit an accurately calculated tax return, using all the tools, incentives and processes SARS has provided in affording you a corresponding tax return.
Keep up to date
Staying on top of your finances and not tossing everything in that shoebox in your cupboard is no doubt the best way of managing your tax matters. Having to catch-up can become a mountain of a task especially when it comes to your expenses.
According to van Jaarsveld, in the process of keeping up to date, you will, as a matter of course, find that you begin to scrutinise your budget and expenditure more closely, often resulting in a quest to lower your expenses or to shop around for better deals on monthly items such as insurance or medical aids etc.
“Once you’re into the hang of it,” says van Jaarsveld, “you can create an actual income statement, giving you a detailed account of your income and expenditure, making you even more in control of your finances.”
For more on how to manage what you pay in tax, read the May 2022 edition of our free digital IOL MONEY magazine here.