This guide explains how to fill in the new, simplified two-page IT12S tax return - the return that most salaried taxpayers who have only simple investments and allowances will fill in. If you need to declare business or professional income, foreign interest income or taxable capital gains, you need to fill in the slightly longer IT12C tax return.
Although one of the big changes introduced this year is that you do not have to submit any supporting documents with your return, you will still need your documents to complete your return. These documents include:
- Details of your banking particulars;
- Your IRP5 and IT3(a) certificates;
- The certificates you received for local interest income in respect of yourself if you are unmarried or married out of community of property, or the certificates received by yourself and your spouse if you are married in community of property;
- The certificates you received from the financial institutions to which you are making contributions for retirement annuities;
- Documents relating to medical expenditure, such as a statement from your medical scheme at the end of February 2007 and proof of other medical claims not submitted to your medical scheme.
- If you receive a travel allowance, the details to calculate your travel claim - in other words, your opening and closing kilometre readings, and details of your business travel and/or costs; and
- Any other documentation relating to local income that must be declared or deductions that you want to claim.
Even though you don't need to submit any documents with your return, you must keep all the documents that support your return for five years after you submit your return, because the South African Revenue Service (SARS) could within this period ask you to submit the documents that verify the information you have declared.
Make sure you use your tax reference number and not the PAYE reference number on your IRP5 that starts with a 7.
Should the return you are completing have any printed
personal information (the returns that were posted were pre-populated with the information SARS has on record), simply verify the information and use the blocks provided to make any changes if applicable.
If you are married, you need to indicate whether you are married in community of property or out of community of property.
Don't forget to check that your bank details are correct in case you are owed a refund. SARS has adopted a policy of issuing all refunds by way of an electronic transfer into your bank account. SARS pays refunds using the branch number of your bank and not the name of the bank. You don't therefore need to name your bank or branch - just supply the branch code.
In this section you need to enter income or benefits you received that are reflected on your IRP5 or IT3(a) certificate. This will include:
- Wages and salaries;
- Service and fringe benefits, such as the use of a company car;
- Allowances;
- Overtime;
- Gratuities/lump sum payments;
- Bonuses; and
- Annuities that are paid to you.
If you do not have enough space on the tax return - eight fields are provided - to enter each income item separately, add up items that have the same source code and enter only the total on your tax return.
For example, you may have received two IRP5 certificates. On the one certificate an amount of R100 000 is reflected as your salary (code 3601). The second IRP5 certificate may reflect an amount of R75 000 in salaries (code 3601). On your return, you can make just one entry for R175 000 (R100 000 + R75 000) next to the code 3601.
Should your IRP5/IT3(a) certificates reflect more than eight different source codes, you will need to phone the SARS Call Centre on 0860 12 12 18 or contact your local SARS office to assist you in the completion of this section.
Next you need to add up all the amounts on your IRP5 certificates under the code 3697.
Amounts on your IRP5/IT3(a) certificates under this code show your gross retirement-funding income. If you did not earn income during the year, you need to fill in a zero in this section and fill in the code 3601.
The IT12S return only provides space for you to declare local interest income next to the code 4201. If you have received any foreign interest income, you need to fill in an IT12C return.
Don't deduct the amount of local interest you are entitled to receive tax-free in terms of the exemption on local interest (R16 500 for the 2006/7 tax year if you are under the age of 65 or R24 500 if you are over the age of 65). SARS's computers are programmed to deduct these exempt amounts for you.
NOTE: If you are married in community of property, you need to enter the total amount of local interest income you and your spouse and your minor children have earned. SARS's computers are programmed to split the amount you enter equally between yourself and your spouse.
In this part of the return you need to tell SARS how much tax you have already paid by way of Standard Income Tax on Employees (SITE) and Pay As You Earn (PAYE) that was deducted from your income.
This information is recorded on your IRP5 certificates next to the codes 4201 (SITE) and 4202 (PAYE).
You also need to record the gross remuneration you received - that is, the amount you earned before any tax or deductions. You will find this information on your IRP5 next to the source code 3699.
The tax return also calls for the number of pay periods in the tax year and the number of these periods that you worked. So if you are paid monthly and you worked for seven months of the year, you need to record the number of pay periods as 12 and the number of pay periods worked as seven. You will find this information on your IRP5.
You also need to fill in the PAYE reference number, which is located directly below the certificate number. In the case of an IRP5, the number will always start with a 7.
If you received an IT3(a) certificate, you may not find the pay periods on the certificate and in this case you must leave these fields blank. These certificates also do not show deductions for SITE and PAYE.
You need to record the information on your gross earnings and the tax you paid in respect of each IRP5 you received. The IT12S return provides three sections in which you can reflect the amount you earned, as well as the tax you paid as recorded on three different certificates. If you received more than three certificates, you need to fill in an IT12C return.
When you enter the amounts in this section, you need to enter both the rands and the cents - this is the only part of the return in which you can enter every cent you paid.
For each section in which you provide information about the tax you have paid, you need to fill in the IRP5 or IT3(a) certificate number. You will find this in the top left-hand corner of your certificate. If you have been given a duplicate certificate, it will have two numbers. The number that you must fill in is the one listed next to the original certificate number.
In this section of the return, you need to fill in the pension fund contributions you have made during the tax year. You will find this information on your IRP5/IT3(a) certificate next to the code 4001, and you need to enter the amount on the return in the section where you are called to fill in your Current pension fund contributions.
If you received more than one certificate, the amounts reflected next to the code 4001 on the various certificates must be added together and the aggregate amount entered on your income tax return.
Your employer should record any arrear contributions on your IRP5/IT3(a) certificate next to the code 4002. Complete this amount next to code 4002 on the return.
Similarly, members of the former non-statutory forces, such as Umkhonto we Sizwe, are entitled to purchase backdated contributions to the Government Pension Fund. Fill in any such contributions next to the code 4026 on your return.
In this section you need to record any contributions you have made to a retirement annuity (RA) fund.
Use the certificate you received from the institution to which you made the contributions to complete the return.
Claim the actual contributions you made in the space provided for Current contributions, and SARS will calculate how much of your contributions you are entitled to deduct.
You can only claim contributions that you as a member of an RA fund make - you cannot claim contributions made on behalf of your spouse or child.
The certificate you received from the institution to which the contributions were made will also indicate if any arrear contributions were made.
Fill in this amount next to the code 4007 on your return.
In this section you need to tell SARS how much you paid in contributions to a medical scheme and the amount of any medical expenses you incurred that you did not recover from a medical scheme.
If your employer paid medical scheme contributions on your behalf, you need to tell SARS how much your employer paid to a medical scheme on your behalf and how much you paid (or how much was deducted from your salary and paid over to the scheme on your behalf).
If your employer deducts your medical scheme contributions from your salary, you will find the information you need on your IRP5 next to the codes 4005 (what you paid) and 4474 (what your employer paid).
Fill in the relevant amount next to the applicable codes on your return.
If you pay your own contributions by, for example, debit order, your medical scheme should have sent you a statement at the end of February stating how much you have paid in contributions over the tax year. Fill in the amount you paid on the return under State your Medical Fund Contribution.
SARS will calculate how much of your contributions you are entitled to claim as a deduction.
But in order to do so it needs to know how many people you have registered as dependants and for whom you are paying contributions. As long as your scheme has registered a member of your family as a dependant, you can claim for contributions paid for that relative as a deduction.
So for example, if you are the principal member and your spouse, two children and your mother are registered on the medical scheme as dependants, you need to enter the number of members and dependants on your return as five.
If the number of dependants for whom you are paying contributions changed during the year, you need to tell SARS. To continue the example above, if your second child was born during the last tax year and only became a member of the scheme, say, in May last year, you will then check the box stating that the number of members and dependants changed during the year of assessment and enter the number of members and dependants and in the blocks below - four for the months March and April, and five for all the other months of the year.
You are also entitled to claim a deduction for medical expenses that you paid to registered medical practitioners, for medicines or to facilities such as nursing homes and hospitals, and that you were unable to recoup from a medical scheme.
SARS will calculate whether or not you are entitled to deduction. All you need to do is supply the information about your expenses. Add the amount of the claims submitted to your medical scheme that your scheme did not pay to the amount of your claims that you did not submit to your medical scheme. Enter this total amount next to the code 4020 on the return.
If you, your spouse or your child is handicapped - for example, if you or one of your dependants is deaf or blind or requires a wheelchair as a result of a permanent disability - you can claim medical expenses incurred as a result of that handicap that you did not recover from your medical scheme. For example, you may need to claim for the cost of the wheelchair.
Enter this information in the section that calls for Handicap Expenses next to the code 4023.
Similarly, if you, your spouse or dependent children have a physical disability - for example, if you wear glasses or suffer from diabetes - you can claim expenses incurred and not recovered from your scheme in respect of this disability in the section that calls for Physical Disability Expenses next to the code 4022.
There are only a few other deductions you are entitled to make from your taxable income if you are a salary earner.
If you are paid a subsistence allowance, reflected as code 3704 on your IRP5, you can claim your actual expenses or certain deemed expenses amounts against the allowance.
You should keep a detailed schedule, noting the destinations, departure and return dates, and the number of days away in respect of each business trip.
If you are claiming your actual expenses, your schedule must also include the amounts and details of the expenses you incurred. If you want to claim the deemed amounts, the amount for local business trips for meals and incidentals is R196 a day.
If your employer pays for your meals during your business trips, the deemed amount for incidentals is R60 a day.
If you travelled abroad, the amount deemed to have been spent on meals and incidentals is US$190 a day.
You can claim any donations you made to a public benefit organisation for which you received a receipt issued in terms of Section 18A of the Income Tax Act.
If you paid premiums on a policy to protect yourself against the loss of your income as a result of illness, injury, disability or unemployment, you should receive a certificate from the institution to which the contributions were made.
Fill in the amount you paid in this section of the tax return next to the code 4018.
If you own an asset such as a computer and you are obliged to use the asset regularly to perform tasks relating to your job, you are entitled to claim depreciation on that asset.
The amount calculated must be filled in next to the code 4027 on your income tax return.
You can only claim for home office expenses if you use part of your home regularly and exclusively as an office from which you earn your taxable income. You cannot claim for an office that doubles as a guest room.
If you have a valid claim, you need to work out the proportion of the total area of your home that your office constitutes and then you can claim the same proportion of your home loan interest rates, rates and taxes, electricity, insurance, security costs and domestic employee's wages.
You should bear in mind that if you claim home office expenses as a deduction against your taxable income, that portion of your home is not regarded as your primary residence and is not exempt from capital gains tax when you sell the house.
Here you could claim legal costs directly related to your salary package that will result in receipt of an amount that is taxable or expenses you have incurred against an allowance given to you if you are the holder of a public office.
If you received a travel allowance, this will be reflected on your IRP5/IT3(a) certificate next to the codes 3701 and/or 3702. You should have recorded the amount you received as an allowance, or the total amounts you received as allowances, in the income section of your return.
Now you need to tell SARS how much of that allowance you actually spent on travel for work purposes.
The IT12S return provides space for you to enter details related to two different vehicles in case you changed your vehicle during the tax year.
If you had only one vehicle during the tax year, enter the details under Vehicle 1 only.
The first question you need to answer is, Did you use a logbook in the determination of business kilometres travelled?. There are different ways you can claim against your travel allowance: you can use either the deemed mileage that SARS allows you to claim or the actual mileage you have driven for business purposes and recorded.
If you want to use the actual mileage, you should have kept a logbook of your mileage, and you can then answer yes to the question about the use of a logbook.
If you use the deemed mileage method, SARS will consider the first 18 000 km you travelled to be for private purposes.
In other words, you need to subtract 18 000 km from your total mileage to determine your business mileage. If, after subtracting the first 18 000 km that is deemed to be for private travel, your mileage exceeds 14 000 km, your deemed business mileage will be limited to 14 000 km.
This means that if you travel less than 18 000 km for private purposes, you will probably be better off keeping a logbook of your business travel and claiming your actual business mileage.
Alternatively, if your business mileage is high and exceeds 14 000 km, you will also probably be better off claiming your actual mileage. If you used your vehicle for business purposes for only part of the year, these deemed mileages must be used pro rata.
For example, if you used your vehicle for business purposes only in January and February this year, your deemed mileage cannot exceed 2/12ths of 14 000 km, which equals 2 333 km, and the first 3 000 km (18 000 divided by 12 and then multiplied by two) you travel will be deemed to have been for private travel.
Remember: travelling between your residence and place of employment is considered private and not business travel.
Next you need to tell SARS for how long you have been using your vehicle for business purposes.
If, for example, you have been using the vehicle for the whole tax year, fill in the Start Date as March 1, 2006 and the Close Date as February 28, 2007.
In the fields on your return marked Starting Km and Closing Km you need to fill in the odometer reading on your vehicle at the start of the tax year or when you started using your vehicle for work purposes, and the reading at the end of the tax year or when you stopped using your vehicle for work purposes.
You also need to supply the total mileage for the tax year (Total Km) applicable to each vehicle.
In the Business Km field, fill in the actual mileage you travelled for work purposes as recorded in your logbook, or calculate your deemed business mileage by subtracting 18 000 km from your total mileage.
You can skip the next six fields under the heading Where Records of Actual Expenditure Were Kept if you are happy to use the fixed costs calculated by SARS.
If you prefer, you can enter the actual amounts you spent on these items during the tax year in respect of each vehicle you used during the tax year.
Lastly, you need to record your vehicle registration number and the cost price, or cash value, of your vehicle. The cost price, or cash value, of your vehicle is the price including VAT that you paid for it when you bought it.
You do not have to calculate the amount that you will be allowed to deduct from your taxable income as a claim against your travel allowance. SARS will work out the amount for you.
- You must complete all relevant parts of the return. Any incomplete return will be sent back to you and will be marked as not submitted until you send it in fully completed. This could result in penalties for the late submission of your return.
- Don't forget to sign the return because if you don't, it will be regarded as not having been received and sent back to you. This could result in penalties for the late submission of your return. If you eFile your return, hitting the submit button will be regarded as signing it.
- Make sure you disclose all the relevant information fully and accurately. You could be liable for penalties and/or additional assessments (together with interest) and/or prosecution if you misrepresent, neglect or omit to furnish relevant information.
Should you require any further information, you can:
- Visit SARS's website, www.sars.gov.za;
- Contact your nearest SARS branch; or
- Call the SARS Call Centre on 0860 12 12 18.
This supplement was compiled by the South African Revenue Service and Personal Finance.