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How to Tackle Tax Season like a Pro

How to Tackle Tax Season like a Pro

Phillip Joubert, Manager at SAIPA Centre of Tax Excellence

It may seem silly that we start talking about the 2023 tax season so early in the year. However, with January almost over there is only one month left before the great reporting machine kicks into gear.

By the end of January, most taxpayers have dusted themselves off after a well-deserved break but have not yet been bogged down in the hustle. This is the perfect time to get your financial affairs in order and review tax filing checklists before life gets too busy again.

Auto assessment: Why pay a practitioner for something I can do myself?

This question was asked by many taxpayers in 2022. And if we are completely honest, some taxpayers do not really need to. But and this is a big but, most still do.

The auto-assessment process has been refined over the last two years, and SARS has made further refinements and will continue to do so. This means that SARS is more and more reliant on third-party data, such as your bank or RAF submitting certificates to SARS. This also includes your employer submitting a copy of your IPR5 to SARS. SARS then compares the information submitted for you, to what you had before and if it meets certain set parameters, they will issue an estimated assessment. Once the deadline to object or change is over, the estimated assessment becomes a final assessment.

But this process is reliant on information at SARS’ disposal. But what about things that SARS doesn’t know about? Your additional medical costs could be huge in comparison to last year, or you could have started to rent out the granny flat on your property. SARS will not know of these changes unless you tell them. And that’s where a qualified tax practitioner will assist you in making the best of these changes.

Why consult a tax practitioner?

Many taxpayers believe that tax practitioners are unessential to them as they don’t have complex tax matters. And while that may be true, there may also be something lurking in the background that could haunt you later.

Tax practitioners are not just there to assist you in completing your tax return. They should be assisting and guiding you through the myriad of legislative provisions that could trip up the layman. If you sold your holiday home in Durban, but decide to reinvest the money in a flat in Cape Town, a qualified experienced tax practitioner will help you maximise your tax position – within the framework of the tax Acts.

Tax Advisory is also becoming more prominent, and even taxpayers who feel they have nothing to gain could do well by knocking on a tax practitioners door. Especially if you’re planning some big changes in your life.

And to top it all off, if you need to dispute your assessment, upload documents, or challenge SARS on a particular outcome, there is no one better to have in your corner than a qualified tax professional.

However, its essential for South African to make sure their tax practitioners are registered with registered with SARS and a Recognised Controlling Body (“RCB”) and are suitably qualified, mentored and monitored to ensure the taxpayer gets the highest level of service.

Professional bodies like SAIPA ensure that tax practitioners are qualified, keep update with professional development and the continuously amendments in tax legislation.

Make a checklist – and check it twice

When it comes to taxes, ignorance is not a defence. Not knowing what documentation you need is a one way ticket to a fine or even worse. Unless something has drastically changed between last year and now, or this is your first time having to submit an income tax return, your best starting point is the documents you sent to your tax practitioner last year.

So, if you had an IRP5 last year, with medical contributions, add that to your list. Did you contribute to your RAF? Make sure that is added too. And don’t forget to take a photo of your odometer on 28 February when you get home – that is, if you receive a travel allowance or are reimbursed travel. If you use last year as a starting point, then you’re well on your way to being prepared for the 2023 filing season. It also helps you keep track of the information you should still receive.

But what if things changed? It is simple enough. Did you invest in a tax-free investment? Did you acquire a new RAF, or sold your home when you semigrated to the West Coast? While you have some time, get all the information ready for your tax practitioner.

So, what is the best way to get ready for Tax Season 2023? Get your documents in order, make a checklist and keep an eye out for the information that will be sent to you between May and June. Meet with a tax practitioner, see if there is anything they can actually assist you with, and get ready for 1 July 2023.