4 Common South African Tax Return Mistakes

4 Common South African Tax Return Mistakes

As a business in South Africa, one of the major issues people face is dealing with tax returns. There are various aspects that people have to stay updated with, but many of the problems people run into stay the same. They are as follows:

Inadequate Recordkeeping

The taxpayer is responsible for keeping various documents as evidence that they’ve filed their tax returns. As a rule of thumb, you should keep such documents for every 5 years after you’ve filed a return.

In some cases, you might not be given a deduction if SARS believes that your record keeping has not been adequate. But which documents should you have with you? Keeping onto retirement annuity certificates, donation certificates, IRP5s, vehicle logbooks, and more.

Not Using a Tax-Free Savings Account

Many people aren’t aware of what a Tax-Free Savings Account actually is. Essentially, it’s an investment vehicle without any tax implications, with the only condition that you can contribute R33,000 each year to the TFSA. For Capital Gains events, interest, or dividend income, there’s no tax on the TFSA. While you don’t have any apparent benefits from it, it’s a great way of reducing some taxes.

Off-The-Books Income

Many people might be tempted to keep some records of their income off the books. As a responsible South African, you have to disclose any financial information to SARS with complete accuracy. Whether deliberately or by accident, any failure to disclose proper income can lead you to different kinds of penalties, which can be fairly severe depending on the understatement.

 A ledger for bookkeeping.

Any mistakes can’t be shifted to an individual dealing with your taxes either, as you’re liable to provide them with accurate information.

Not Making the Most of Retirement Annuity

One of the most efficient ways of saving up on taxes is the Retirement Annuity (RA). People across the country use it to reduce their taxable income. They’re fully tax-deductible, and you can make contributions of around R350,000. For this reason, most people should look into them for their use case.

Ensure that your business doesn’t run into any unnecessary hurdles by working withbusiness accounting services. If you’re a business looking for a host of services like business payroll services, VAT accounting services, tax preparation services, professional bookkeepers for hire, company registration services in South Africa, and more, ANM Auditors can help you. They have the experience in helping small businesses stay efficient and compliant. Reach out to them today.

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