Earn less than R250k/pa and you dont have to submit a tax return?

A client called me today and asked if this is true. Because SARS sent out an sms informing taxpayers that if their income is less than R250k per annum, they don’t need to submit a tax return.

The above statement is unfortunately true.

It was announced in the budget speech. But it is unfortunate that SARS doesn’t require you to submit a tax return if your income is less than R250k.

This is why.

There are countless deductions that taxpayers can legally use to decrease their tax bill. But if you’re not submitting a return, that means you are not getting back the money back that SARS rightfully owes you?

Say you earn R250k for the year, and you are taxed on that monthly in the form of PAYE. Now when you do your tax submission, you can claim deductions of R50k. So that means you had to have only paid tax on R200k. Your refund will then be the difference of the tax paid on R250k, and the tax payable on R200k. The average tax payer heeding this statement by SARS, will as a result not submit a return, and as a result of that will not receive a refund from SARS.

The irony of this, is that the taxpayer, oblivious to all of this will actually feel too happy that he didn’t submit a return to SARS.

My advice: Get your return submitted. Whether you do it yourself or via an accountant.