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Here’s why you should be filing your tax return

Finance & Money

Posted on Friday, October 2, 2020

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It’s tax season, but don’t fret! Although the process can be daunting, if you file your tax return correctly, you can reap the benefits, but it’s important to be aware of the risks too. Here’s everything you need to know.

 

6 reasons to file your tax return

  1. You could get a refund

    If you’ve overpaid on taxes, you could qualify for a tax refund from SARS, but this can only happen if you file your tax return. Refunds are usually made if you claim for expenses like contributions made towards medical aid, donations and retirement annuities. Once you’ve filed your taxes, SARS will let you know if you qualify for a refund.

  1. It could help you with a loan application

    If you need to borrow money in the form of a long-term loan, such as a bond or car loan, you may need to produce a Tax Clearance Certificate to qualify. This certificate can only be obtained if your tax returns are up to date.

  1. You are contributing to society

    Filing your tax return every year means you are contributing towards society. The income tax you pay is money that goes towards paying for the maintenance of roads, schools and hospitals, and for other government services.

  1. You could be penalised if you don’t file your tax return

    If you don’t submit your tax return, you will be slapped with an admin penalty, which you’ll need to pay to SARS. This penalty is applicable to both individuals and companies who fail to file their tax returns.

  1. You may not be able to access your retirement fund

    If you need to access money from your retirement fund at any point, you may have trouble getting it if you haven’t been submitting your tax returns. This applies even if you are retrenched or have retired.

  1. You could claim for home office expenses

    If you work from home, you may qualify to claim for home office expenses if:

    • You are self-employed
    • You spend 50% of the tax year working from home
    • You work in a dedicated office space in your home that resembles a real office
    • You are employed and work from home 50% of the tax year, but your employer doesn’t cover office expenses

If you’ve been working from home during the lockdown, you can choose to claim for home office expenses if you have a dedicated office space and your company hasn’t been paying for your work resources. In this case, you can claim for this in the 2020/2021 tax season.

 

It’s important to note that even if you qualify to apply for a tax deduction in all of the above cases, your claim may not be approved.

 

Should you be filing your taxes?

It’s a good idea to file a tax return once you start paying tax, but if you’d like to know if you need to, you can find out on the SARS website or by contacting one of their helpful consultants.