In a month or so many of us will be groaning at the thought of having to
fill in another tax return. Yes, it`s that time of year again.
But filling in your tax form need not be too difficult provided you take it
slowly and methodically. Over the next few weeks we`ll look at how to do it.
Before you even think about a tax return, you first have to determine if
you are required by law to register as a taxpayer or, even if you are not
required to register, whether you should do so anyway because it is
beneficial for you.
When you fill in the tax return, you need to state your gross income and
gross expenses in full without doing any calculations yourself.
Most of the information you need is either given to you or you can obtain
it yourself. If you are employed, the IRP5 form which your employer gives
you sometime after February, provides what you need for you to fill in the
return.
If you have some other business (for instance, if you rent out a flat) you
would normally have kept records yourself. If you do not keep records for
your businesses, the Receiver will simply estimate what profits you made
(even if you really made losses).
The IRP5 breaks down your income into categories - basic salary,
allowances, fringe benefits). All you have to do is to repeat them in the
tax return - no calculations.
If you receive a pension or annuity, treat this in the same way as a
salary. The bank or institution concerned (like Standard Bank or Old
Mutual) will give you a certificate showing how much interest income or
annuity income you have received from your deposits or other investments
for the 12 months up to February every year. You simply need to write those
amounts in the tax return.
For rent income, there`s space for you to disclose your rent income and
expenses.
For expenses, you could simply add up the amounts shown on all the tax
invoices you received from payments you made (your compulsory
employment-related expenses will be reflected in your IRP5) but obviously
these have to be separated into those for entertainment expenses, donations
and so on.
Don`t worry if there is a limit to the amounts you can claim, as the
Receiver will work that out for you.
The remaining parts of the return will be questions which you need to
respond to and that should not be a problem.
The Receiver also gives you a brochure that guides you clearly how to go
about filling in that return.
Once you have completed filling it in, do your own separate tax calculation
(which you may or may not submit with the return) to see if the Receiver
assesses you in line with your expectations. You should do this just to
make sure that you received all the rebates that you are entitled to and
that there are no errors. To do this calculation, you will have to know the
limits to the amounts you can claim as expenses.
There are certain parts of the tax return which I think have been phrased
in a slightly tricky manner and may confuse the average person without a
tax background. In future columns, I will try to explain why they have been
included, so you can appreciate some of the reasons why these questions are
asked. For you to benefit from this, you will either have to have a copy of
the tax return to follow or keep these articles until you get the return
for year 2000 and apply them accordingly.
Throughout this series we`ll be talking about the tax rules which apply to
the year 1999-2000 because the new rules announced in the Budget last month
will only apply to the 2000-2001 tax year - the subject of next year`s
return.