What It Means To File Annual Tax Returns and Receive Refunds.
I have dealt with numerous cases where individuals are facing problems such as owing SARS money and being unable to receive their last pay-out after their resignation/retrenchment. This has included elderly people that are already on pension.
My wish is for my fellow citizens to understand the role taxes (SARS) play because many have fed themselves with your funds while you also receive partially while still employed.
When one receives a refund it is important to ask “How am I receiving a refund?” There is always a reason. Please understand this: the function of SARS is more to collect monies from the taxpayers (citizens) and less to pay money out. There are many organisations that give out money, but make no mistake, SARS is not one of them.
What is filing annual returns?
You or your company on your behalf pay taxes every month – PAYE (pay as you earn) and this is deducted on a monthly basis to SARS as reflected on your payslip. This means you are already paying tax.
Question: Why must you still submit when you are already paying and there is proof?
Every tax season you are required to gather your IRP5 and a summary of all deductions such as medical aid (you must provide a medical tax certificate), log books for those who have car allowances, retirement annuity deductions, etc.
An IRP5 in simple terms is a summary of all the deductions made by your employer over the last 12 months. It is always a must that you have it. After obtaining all of the documentation we file; either via eFiling or directly at a SARS branch. The filing process consists of the comparison of the deductions as presented on the IRP5 and what SARS has received from you previously (from your employer) if all the figures agree there is no refund for you and you don’t owe the taxman.
How does one get a refund? If after filing what you have on your IRP5 is not equal to the data SARS has on their system it means that your company was over-deducting from you and that money is paid back to you by SARS – we call it a REFUND.
There are instances however where you may owe SARS – this will be because your company was under-deducting your taxes and as a result you must pay back the money after all the reconciliations have been made. This is a result of your companies’ short payment.
My focus with this blog is on those that have been receiving pay-outs from SARS. I have found out that one will use a consultant with the promise of a refund without understanding what it is or how it happens. This is what happens: Consultants will take out information – a summary of deductions from the IRP5 (when they file) and this will guarantee that you receive money back because your documents will reflect as if your company has been over deducting. This is illegal and fraudulent. What you have received as a refund is an illegal refund.
The consequences: you are bound to receive incentives as a lump sum from SARS upon your resignation, retrenchment or pension. Therefore if you have been getting illegal refunds while still employed you are absolutely digging a hole for yourself.
You are lucky if SARS notifies you while you are still employed and you are able to fix it because many others only realise when they submit their final returns and it becomes very confusing and painful – but I did say SARS would never give you money that does not belong to you. At times they do not notify you, they just have a garnishee order put against you via your employer.
SARS is not your investment/savings institute where you put money in only to receive it back later. Please always ask questions as to how anyone receives money from SARS, especially when they are using your profile.
Compiled by Dikeledi Seoloane, on behalf of Matsobanemetja Business Consulting (Pty) Ltd
info@matsobanemetja.co.za
Matsobanemetja Business Consulting Pty Ltd 