Millennial's guide to TAXES!
Charging tax on the income and expenditure on citizens is the government’s way of accumulating funding to be used on the public (in other words, the citizens of SA). In its simplest form, the definition of tax would be ‘the compulsory financial charge on certain goods and services, or on individuals’ salaries and business profits, to aid the government with their responsibilities’.
The South African Revenue Service (SARS) is in charge of all tax-related matters for the government of South Africa – or at least the collection thereof. As a working citizen of South Africa, it is vital to be registered with SARS to be able to pay your taxes.
PS. Sometimes when applying for a job, they expect you to have a tax number. Get it even when you are not yet working to avoid missing opportunities.
There are different types of tax in the country and we might not have to deal with all of them – some are for bigger corporate companies and some affect everyone buying groceries in supermarkets. The most common ones that everyone will probably encounter are discussed below:
VAT (Value-Added Tax):
Value-Added Tax is tax charged on goods and services bought from registered vendors (e.g. Spar or PnP). It is charged based on the amount that an individual spends on these goods and services, but there is a national rate used to calculate it.
VAT Rate - 15% effective from April 2018 (increased from 14% in previous years).
PAYE (Pay-As-You-Earn) or Employees’ Tax:
As with most tax calculations, your PAYE/Employees’ Tax amount depends on your monthly income. Your employee is responsible for ensuring that this amount is deducted from your salary and payed to SARS, but in rare cases where your salary is given to you in person, your PAYE payment might be solely your responsibility.
PAYE or Employees’ Tax benefits you as an individual. The money payed towards your PAYE tax helps pay due tax payments and, if the amount payed exceeds the amount due, it can be refunded.
Employees’ Tax depends on a lot of factors including age and salary amounts. There are thresholds set depending on your age and tax rates depending on your salary. There are great resources online to help you learn how to calculate how much tax you owe the government.
UIF (Unemployment Insurance Fund):
Closely paired with PAYE tax, UIF is an insurance fund that can be attainable when an individual is no longer employed to help sustain their life. Usually employers ensure that there is a contribution to this fund and they also decide how much to deduct for this fund.
In South Africa, the tax year starts in March and ends in February and tax-paying citizens are expected to file their tax returns between the months of July and November – online or at a SARS branch. To file your income tax returns, you will use an ITR12 form which will list all your income and expenditure amounts in order for SARS to calculate how much tax you need to pay (or your refund).
When filing your tax returns, you will need your banking details, a statement, your IRP5 form which you are supposed to get from your employer as well as other documents that you can find listed on SARS’ website. If you go to a SARS branch, this can be stressful; you will need to be 100% sure you have everything.
Millennials, including myself, like convenience and doing everything online is the most convenient way to live life in our eyes. SARS offers that convenience to us, so you do not have to worry about ques and forgetting documents: e-filing is available.
When e-filing, you can save your ITR12 while looking for documents or to review later before submitting (or to resubmit if you might’ve made a mistake). You always have your tax return history online and you have the option of receiving SMS/email notifications to remind you about submissions. Once again, Google is your friend if you need more information.
Now that I think about it, filing your tax returns is not a hard or difficult task.
Do the right thing!