Getting to terms with tax is not an easy task. Even Albert Einstein, probably the most intelligent human being in all history of mankind, confirmed the difficulty of tax when he said ‘the hardest thing in the world to understand is income tax’.
That is why there are many professional tax practitioners out there who will gladly assist or manage your tax affairs.
Now that the tax filing season is upon us many people are uncertain on how to go about their income tax returns. What exactly do they do and to whom do they turn to for assistance. The simplest way to tackle these uncertainties is by following a sensible, practical and pro-active approach.
But always remember when dealing with your taxes, every decision now made has an impact on your long-term financial situation. Any policy, insurance or medical scheme now signed up for e.g. pension fund, annuity, medical scheme, car insurance etc., has tax implications.
So before putting down your signature for any long-term commitment rather consult a professional tax practitioner to eliminate any type of uncertainties.
Tax is dealt with on a historical basis.
From receiving financial information to the completion of tax returns, a two-year lag applies. SARS only receives assessments prior to the beginning of the new tax year. So it might happen that you pay tax on something you’ve forgotten about, be faced with unanticipated debt to SARS or stress about information you have lost, misplaced or long forgotten about.
It may even take months to retrieve money from SARS which you shouldn’t have paid in the first place. It is then when you need to consult a tax practitioner for professional expertise and advice.
The scenarios listed below could influence your tax:
If you resign from your current work and belong to a pension or provident fund, you need to decide what you want to do with the lump sum of money. Do you want the money paid out or continue the fund by transferring the current monies to your next employer? Whichever decision you make, each one has tax implications.
A new job or promotion at work with travel allowance.
SARS sets out certain criteria and if not met you could end up with a tax liability or SARS debt after the assessment of your tax return. But remember: if you only become aware of this 18 months later you can end up with the same negative result for an additional two tax years.
When it comes to your taxes, don’t make any hasty decisions. Rather get as much information as possible to make informed decisions. If you are uncertain for any reason rather consult a registered, tax practitioner.
In conclusion: always remember most financial decisions made now have long-term implications.