Tax season opens with healthy toll

TAX season opened on July 1 with 53,724 returns filed via eFiling and a further 30,919 at South African Revenue Service (SARS) branches.

That sounds like good going, but it might just be down to tax practitioners who cannot wait to file simple returns so they can bill for their work.

There are 13 million individual tax numbers. Based on 2011 SARS numbers, 4.5-million actually pay tax. Most of the 1.9-million taxpayers who earn less than R120,000 are not required to submit returns if they only have one source of employment income.

In the 2014 tax year the tax-return submission threshold will be increased to R250,000, exempting about 1.4-million more South Africans from submitting returns.

So there will only be about 1.2-million taxpayers who remain responsible to file returns. One wonders how many tax practitioners will still be in business.

If the taxpayer does not file a return, it means that no tax deduction has been claimed. Not many taxpayers lose out as most of the opportunities for employed taxpayers have been closed down; they can, in the main, claim deductions only for medical expenses and retirement annuity fund contributions.

The enormous SARS efforts to recover employees’ tax have certainly yielded handsome dividends. SARS has most of the individuals’ tax collection in the bag by March 7 every year.

And millions of taxpayers are left outside of the tax-return system and all the headaches that go with it.

There are a few gripes, particularly from employers who have a massive administrative burden. But it’s all getting easier.

Individual taxpayers now pay 35% of South Africa’s total tax collections. And a lot more in VAT and other transaction taxes.

Taxpayers complain: “If SARS can get it right, why can we not control fraud and corruption?”

SARS is one organisation collecting tax nationally with a lot of co-opted help from business. Thereafter, most of the collection gets dished out to the provinces and nearly 300 metros and municipalities with inadequate supervision and accountability. There lies the problem.

Originally published in the Sunday Times: Money & Careers Tax Talk column.

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