Navigating Your Journey: 5 Common Tax Questions Answered

Question 1: Why is SARS not refunding me?

If your refund is delayed, it usually stems from one of the following "Verification Red Flags":

• Manual Verification or Audit: SARS may have flagged your return for a document check. You will need to submit supporting evidence like your IRP5 or medical aid certificate.
• Outstanding Returns: A refund will be withheld if there are unsubmitted tax returns from previous years.
• Banking Detail Issues: If your bank account is unverified, incorrect, or recently changed, you must update your details via eFiling.
• High-Value or Complex Returns: Large or unusual transactions often trigger a deeper manual review to ensure compliance.
• Debt Offsetting: If you owe SARS for another tax type (such as VAT or PAYE), your refund may be used to settle that balance first.

The Solution: For a swift resolution and to ensure your compliance is up to date, contact StormTank for professional assistance.

Question 2: Why is SARS sending me outstanding debt letters?

Receiving a debt letter can be stressful, but it often relates to:

• Administrative Penalties: These are frequently issued for failing to submit returns on time.
• Unpaid Tax Liability: You may have a balance due from a filed return that hasn't been settled.
• Audit Adjustments: Following a review, SARS may have adjusted your calculations, resulting in a higher amount owed.
• Provisional Tax Underpayment: If your provisional payments were insufficient, the shortfall is converted to debt.

Immediate Action Plan:

1. Stay Calm: Do not click on links in emails or SMS messages.
2. Verify via eFiling: Log in to your official account to confirm the debt is legitimate.
3. Check for Scams: Authentic letters will not contain external hyperlinks.
4. The 10-Day Rule: You generally have 10 business days to pay, arrange a payment plan, or lodge a dispute.
5. Seek Expert Help: If you need to dispute the amount or cannot afford the payment, contact a tax consultant immediately.

Question 3: I am receiving rental income—is SARS aware of this?

SARS has several sophisticated methods for identifying undeclared rental income:

• Data Matching: Financial institutions report interest, account details, and large deposits every six months. Regular monthly deposits are easily flagged as potential rent.
• Deeds Office Integration: SARS cross-references property registries. If you own multiple properties but report no rental income, it triggers an inquiry.
• Third-Party Platforms: SARS increasingly monitors data from rental management software and online hosting platforms like Airbnb.

What to do if you haven't declared: Non-disclosure carries the risk of penalties, interest, and legal action. It is highly recommended to use the Voluntary Disclosure Programme (VDP) to correct your affairs before SARS detects the omission. This proactive step can significantly reduce or eliminate penalties.

Question 4: Can I receive income after retirement, and should I pay tax?

Yes, you can earn income after retiring, and it is generally taxable at your marginal rate. Common sources include:

• Consulting or Part-Time Work: Taxed as earned income.
• Rental & Investment Income: This includes rent, interest, dividends, and capital gains.
• Annuity Income: Regular payments from a living or life annuity are considered taxable.

Tax Benefits for Retirees:

• Rebates: Individuals over 65 receive a secondary rebate (and a tertiary rebate at 75), reducing the overall tax burden.
• Interest Exemptions: For those 65+, interest income is exempt up to R34,500 per year.
• Medical Credits: You can claim 33.3% of "out-of-pocket" medical expenses not covered by your medical aid.
• Disallowed Contributions: If you contributed more than 27.5% to retirement funds during your career, those "excess" contributions can often be used to reduce the tax on your pension income.

Question 5: What tax deductions can I claim?

In South Africa, the general rule is that you can deduct expenses incurred in the production of income. Key deductions include:

• Retirement Contributions: Up to 27.5% of your taxable income (capped at R350,000 per year).
• Medical Scheme Fees: Through the medical scheme fees tax credit.
• Donations: To approved Section 18A Public Benefit Organisations.
• Work-from-Home Expenses: If you are a commission earner, business owner, or meet specific "home office" criteria, you may deduct business travel, equipment, and a pro-rata share of home expenses.