Filling in your return needn't be too taxing, if you take it slowly and systematically. Follow our easy-to-use do-it-yourself guides and you'll find it's simpler than you thought. In the first of three guides - compiled with the help of the South African Revenue Service (SARS) - we show you how to fill in the section dealing with income. The second guide will take you through claiming deductions, and part three will answer frequently asked questions.
Where to begin
Start by collecting all the documents you are likely to need: the IRP5/IT3a certificate supplied by your employer; details of interest income you earned in the year March 1, 2000 to February 28, 2001; annuities (regular payments, similar to pensions); rental income received; and income advices for any other payments received.
The IRP5/IT3a certificate is your employer's notification of what you have earned and of amounts deducted from your earnings (such as pension and medical contributions as well as amounts deducted in respect of income tax).
Next week, when we deal with deductions, you'll need other documents, including medical scheme slips, doctors' and other medical bills you intend to claim and your car logbook, if you kept one.
The tax return for most people hasn't changed much since last year.
Start by checking your personal particulars on page 1. Fill in the white areas only where your particulars have changed or have not been printed in the shaded areas.
Don't forget to sign the return once you have completed it. If you send the South African Revenue Service an unsigned return, it will be sent back to you and you run the risk of being penalised for late submission.
INCOME FROM EMPLOYMENT
If you receive a salary, commission or a pension turn to part 4.1, 4.2, 4.3 and 4.4
Here you'll be expected to provide the taxman with details of what you've earned in the tax year. The information you'll need is mostly on the IRP5 certificate your employer has provided.
Write down your main source of income (salary or pension for instance). You'll also have to fill in a code number, referring to the sector of the economy you work in, whether agriculture, construction, the public service, or whatever. You'll find a list of the sectors and codes on page 2 of the tax brochure. If you work for a retail outlet, for example, the source code would be 3522.
Fill in part 4.2 according to the information reflected on your IRP5/IT3a.
All your receipts from remuneration should be entered here together with their codes.
- Write in the name of your employer (or pension fund if you are retired);
- Write in the source of your income - salary, bonus, pension;
- Write in the period for which you were paid;
- Write in Y or N to show whether the money was retirement funding or not. Retirement funding income means the amount of your income which is used for the purpose of determining your pension fund contributions and those of your employer. It can include salary, allowances, commission and fringe benefits, depending on the rules of your pension fund.
This is important because it determines the amount which will be allowed by the South African Revenue Service (SARS) as a deduction in respect of retirement annuity contributions. So don't forget to fill in the Y or the N.
The information should be on your IRP5 certificate.
- Write in the source codes from your IRP5 certificate. For example:
Salary3601
Bonus (annual payment)3605
Commission3606
Monthly pension3603
YOUR IRP 5/IT3a CERTIFICATE MUST BE ATTACHED
TO PAGE 9 OF THE RETURN
Part 4.3 refers to allowances you received, such as entertainment or travel. Again, you must insert Y or N to show whether the money was retirement funding or not. Enter the amount of the allowance by matching the source code with the source code on your IRP5 certificate. The source codes all begin with 37 and are printed on the form for you. All you have to do is fill in the amount reflected on your IRP5 certificate next to this code.
Part 4.4 deals with fringe benefits and must be completed in the same way. These codes all begin with 38 and include such things as the use of a motor vehicle, low-interest loans and any medical aid contributions which are paid for by your employer and entered on the income portion of your IRP5 certificate.
INCOME FROM INVESTMENTS
Once you have filled in details of your income from employment or a pension, you must declare income from other sources.
With income from investments, the tax return distinguishes between:
- Interest income; and
- Foreign dividends.
You also have to declare income you earned from other sources including:
- Rent;
- Annuities; and
- Royalties.
If you received interest turn to part 4.5
First turn to the table in part 9 on page 6 to work out all the interest income you've received. Fill in interest from any investment, including savings accounts and the interest content of unit trust payouts, as well as interest earned on investments outside of South Africa. DON'T include South African dividends - these are not taxable, although you must declare any dividends you earned in part 14 of the return.
If you are married in community of property, you need to reflect all interest income received by yourself and your spouse. Only half of this income received must be transferred to part 4.5.1 of the return. The other half is taxable in the hands of your spouse.
If you are unmarried or married out of community of property, you need to reflect only your interest and the total amount must be transferred to part 4.5.1.
The full amount of interest received must be declared as the exempt portion will be deducted by SARS (R3 000 for persons under the age of 65 years and R4 000 for those 65 years and older).
Now turn to part 7. This is where dividends earned from foreign sources are subject to tax and must be declared. The result must be transferred to part 4.5.2. (This will be discussed in detail in the last part of this series on filling in your tax return.)
If you earned royalties or other accruals ... turn to part 4.6.4 & 4.6.5
This part deals with royalties and other receipts and accruals. Don't include income from a business here. This is provided
for in part 4.10.
AN INCOME ADVICE IN RESPECT OF ANY INCOME RECEIVED DURING THE TAX YEAR MUST BE OBTAINED FROM THE RELEVANT INSTITUTION AND ATTACHED TO THE RETURN.
If you earned income from an annuity turn to part 4.6.2 & 4.6.3
This part deals with annuities from retirement annuity funds and other annuities such as purchased annuities.
A CERTIFICATE FROM THE INSURANCE COMPANY MUST BE ATTACHED TO PAGE 9 OF THE RETURN.
Only the taxable portion of a purchased annuity needs to be reflected under the code 3611.
If you earned rental income turn to part 4.6.1
If you received RENT from letting a property, you must turn to part 12 to calculate the total. You can deduct expenses as shown. The net result should be entered in 4.6.1. Again, if you are married in community of property, you may divide the result in half.
If you resigned or retired during the year and received a lump sum turn to part 4.7
If you received lump sum benefits on retirement or resignation, choose the appropriate option to enter your lump sum benefits, depending on whether you:
- Resigned from a pension fund;
- Resigned from a provident fund;
- Retired from a pension or retirement annuity fund; or
- Retired from a provident fund.
In each case you need only enter the name of the fund and the total amount you received as shown on the IRP5 supplied by the applicable fund.
SARS will determine the taxable amount.
If you received leave pay or other gratuities turn to part 4.8
Here you must enter any leave pay or other gratuities, including retrenchment pay. Fill in the full amount - the taxman will decide how much is taxable. Such amounts will be indicated on the IRP5 received from your employer under the source code 3901.