How does e-filing work?

It’s the tax season again and millions of South Africans are getting their affairs in order to submit their tax returns. For the past few years, a lot of focus has fallen on e-filing – SARS’s electronic tax filing system. But how does it work?

Firstly, let’s look at why you should rather use the e-filing service as opposed to going into a SARS branch and manually submitting your tax returns.

One of the most obvious benefits are that you can submit your tax returns from the comfort and convenience of your own home. No more waiting in queues, driving around the block three times to find a parking spot or taking off from work to go to the SARS offices. Once you’ve registered on e-filing, you can submit returns, view your tax status and make payments to SARS electronically – 24 hours a day and 7 days a week!

Let’s see how it works. First you need to have a computer, access to the internet and a working email address. Make sure you have the needed Adobe Flash player version installed (version 10.3.0 and upwards) as well as Adobe Reader (version 9 and upwards). Before you can proceed, you need to register on the e-filing system. In order to register, you need your income tax registration number, identity number and bank account details. Visit www.sarsefiling.co.za, click on the “Register” link and follow the online instructions. After registering and logging in, you will be able to view your ITR12 form. Upon opening this form, you will receive a message saying that a return has been generated for you using the latest IRP5 information that SARS received from your employer.

You are now ready to create your electronic return. The first page is a questionnaire with the purpose to filter through all possible tax return options to see which are relevant to you. After completing the questionnaire, click on “Generate form” to generate the form with your required fields. Although you don’t need to submit any supporting documents with your income tax return, you need the information on those documents. These documents include:  your bank account details, IRP5 certificate (from your employer), financial statements that reflect any business income you earned, information relating to any capital gains you may have made, documents relating to medical expenditure, travel allowance details and any other documentation relating to income that must be declared or deductions you want to claim.

Check that your personal details and salary details are correct. If you have an investment income, be sure to declare that here. Also fill in any taxable capital gains you may have made during the tax year. If you have any other form of income, be sure to declare that. If not, skip this section.

Next you need to record your annual medical expenses. This is specifically for medical expenses that you did not recover from a medical scheme.

If you’ve contributed to a retirement annuity, state so in the online questionnaire under the section headed “Retirement and income protection contributions” – even if you’ve done so through an employer.

The next step is to claim your work-related travel expenses against an allowance. If you receive a travel allowance from your employer, the allowance paid to you should be recorded in the income section of your income tax return.

The last step in this part of e-filing is to claim any other deductions, which could include the following: claim against a subsistence allowance you receive for travelling for business purposes; donations made to an approved public benefit organisation; depreciation of assets and home office expenses.

Next you can view a preliminary assessment report on the possible outcome of your return. Click “save return” and then use the “tax calculator” button which will give you an idea of whether you still owe SARS money or whether you will receive money back.

The very last step is to submit your tax return before the deadline, by clicking on the “File” button. Once you’ve submitted your tax return, SARS will assess it and you will receive a Notice of Assessment, which will state what you owe SARS (or vice versa).

The biggest benefit of making use of e-filing, is that you will receive your assessment result within 48 hours – assuming you completed it honestly and correctly. SARS might ask to view your supporting documentation, so be sure to keep those records for up to 5 years.

Do you use e-filing, let us know?

How to register a company in South Africa

Anyone who has ever started a company knows that there is much more to it than simply getting a product and a catchy name and proceeding to make money. Before you can start doing anything productive, you will have to register your company as such. The process that goes into this, however, is not as simple as just sending in an application. The following is a basic step-by-step guide showing what needs to be done in order to successfully register a business in South Africa:

1.     Prepare and certify documentation

Before you are able to register your company, no matter what type you have chosen to pursue, you will need to consult an attorney who is legally allowed to submit formation documentation. All documentation must be certified and submitted either by an attorney or an attorney’s clerk on your behalf.

2.     Register and pay for the reservation of a name

In order to register a company name, you will have to submit a list of three to five preferred names to the CIPC. The list will then be checked against existing names, and once one is approved (the one ranked highest on your list, if available, will be assigned), it will be reserved for you for two months, subject to payment of all fees beforehand. During these two months you will need to have your business incorporated, or lose the name reservation.

3.     Lodge formation documentation for registration

This step can only take place once a name has been reserved, all documentation relevant to the particular type of business and holding has been submitted, and fees have been payed. The Registrar will then issue a registration number, certificate of incorporation, a certificate to commence business and various other forms which will be used to prove the validity of the business’s status.

4.     Open a bank account

In order to set up an official company bank account, you will need to submit certified copies of all of the above mentioned forms to the bank of your choice, potentially along with other documentation, such as a business plan, statement of purpose, etc., if you are applying for finance through the banking institution.

5.     Register with all other relevant offices

Before you can start hiring employees and trading as an official company, you will need to register your company at your local branch of SARS, so that you and your employees will be covered for the various types of tax involved in the running of your business. You will also need to register at the Department of Labour for Unemployment Insurance and compensation for occupational injuries and diseases.