4 mistakes to avoid when submitting your personal tax return

A travel allowance is paid to an employee if they travel for business purposes. This is usually paid on a monthly basis, irrespective of the kilometres travelled. Your employer is required to withhold PAYE (pay as you earn). it can be either from 20% or 80% of the amount based on how often you need to travel.

If your employer reimburses you for each kilometre travelled, it is not required to withhold PAYE. They are if the amount the employer pays you exceeds the prescribed rate per kilometre. There is no limit to the number of mileage with this rate.

In this instance, your employer should withhold PAYE only from the amount that exceeds the prescribed rate per kilometre (Please check the latest rate).

You must provide sufficient information to SARS for the deduction to be allowed.

How to claim the tax deduction:

Select “Y” on the question “Do you want to claim a deduction against a travel allowance?”.

Once this field is activated, you need to indicate the number of cars you used.

You will then complete details such as the car model, car make, cost price or cash value, registration number, the kilometres travelled and whether a logbook was kept.

If this section is not completed, the travel allowance and/or reimbursement (if it exceeded the prescribed rate) which you received for the year will be included in taxable income and be taxed.

Mistake 2: Not declaring medical dependants

If a part or all of your medical aid contribution is administered through the payroll, your employer must consider the monthly medical tax credits before your tax is calculated for the month.

Please make sure you get the latest rate here

If the medical aid contribution is not administered through the payroll, you may provide your employer with proof that you are contributing towards a medical aid in your private capacity.

Your employer can then grant the benefit of the monthly medical tax credit. You must indicate the number of medical dependants you paid for per month in the annual tax return.

Even if the employer applied for the medical tax credits on the payroll on a monthly basis, SARS will disregard the medical tax credits if the dependants are not indicated on the return. You will then owe SARS money.

You must also declare your total medical expenses to claim additional qualifying medical expenses. This has become an easy exercise on the personal tax return in recent years.

How to claim the medical tax credit and additional qualifying medical expenses:

Select “Y” on the following question after which you need to enter the number of dependants.

If you are not the principal member of the medical aid but you have paid medical contributions/expenses for family members who are dependent on you for family care and support, select “Y” on the following question after which you need to enter the number of dependants:

Mistake 3: Not claiming an exemption for remuneration earned abroad

Did you perform duties outside of South Africa on behalf of your employer for more than 183 days of the year, of which at least 60 days were continuous?

If so, the remuneration you earned for the work in the foreign country is not subject to income tax in South Africa. Your employer might have applied for the exemption in South Africa, or it may still have withheld PAYE from your remuneration.

Irrespective of whether you are entitled to the exemption or not, the salary earned in the foreign country must be reflected against IRP5 code 3651 and not 3652.

Other remuneration earned abroad must also be reflected against the correct IRP5 codes on the employee’s tax certificate. The remuneration reflected on IRP5 code 3651 (and other relevant remuneration earned abroad) will not automatically be exempt from income tax. You must indicate that remuneration was earned for services rendered in a foreign country. If all requirements are met, the exemption will be granted.

How to claim the exemption:

Select “Y” on the question ‘Did you receive any form of remuneration for foreign services rendered?’ and complete the relevant section in which case the exemption might be granted

Mistake 4: Not making use of a reputable tax practitioner

You, as the taxpayer, are responsible for declaring the correct information to SARS and will face the consequences if you don’t. Your personal tax return is YOUR responsibility, not anyone else’s.

Ensure that your tax practitioner declares all income by providing all the correct information to him or her. You may have heard of friends getting a refund from SARS – don’t necessarily imagine that this is because they have a better tax practitioner than you.

Each person’s circumstances and income differs, so some people might receive refunds and others not.

A reputable tax practitioner will complete everything accurately based on the information you provided in order to only reflect a refund if it is allowed by law.

Consider putting more money into retirement funding to reduce your taxable income for the next year.

Also, remember to check your car’s odometer reading at the end of February to update your logbook.