Use our handy checklist to keep track of the information and documents you’ll need to file your tax return correctly.
Some of you may be familiar with the proverb “a fine is a tax for doing wrong, a tax is a fine for doing well.” It’s the same every tax season: Random documents gain significance, dates on documents take on new meanings, and acronyms such as IRP5, IT3(b), and PAYE are all the rage. Every year, the same scurry ensues to locate documentation and receipts, as well as mileage and supporting documentation. The checklist below will assist you in preparing for your next ITR12 submission.
- What documentas are needed to submit your tax return?
- Details of your banking information
- IRP5/IT3(a) employee tax certificate
- Prior year tax return and assessment
- Investment income (local interest income, foreign interest income, foreign dividends)
- Travel allowance
- Your medical scheme fees and qualifying medical expenses
- Married in community of property
- Income tax certificates for retirement annuity contributions made
- Capital gains transactions
- Commission-related expenditure
- Trading and farming activities
- Expenses against local and/or foreign subsistence allowance
- Home office expenses
- Accounting or administration fees for the completion of your income tax return
What documentas are needed to submit your tax return?
Details of your banking information
Without precise banking information, SARS will not be able to provide you with a refund.
- Bank confirmation letter
IRP5/IT3(a) employee tax certificate
If you earned remuneration-related income, such as a salary or a travel allowance, and incurred typical remuneration-related expenses, such as pension fund payments, medical aid contributions, or retirement annuity contributions, you will be granted one of these certificates. Your company is required by law to furnish you with a tax certificate for employees.
Because your employer submits the IRP5/IT3(a) information to SARS via the EMP501 employer reconciliation process, the appropriate information will be pre-populated on your return. To check that the information is correct, compare the IRP5/IT3(a) certificates to the pre-populated information.
If your medical contributions were paid by your employer or if you supplied confirmation to your employer of medical aid contributions made by you, the medical schemes tax credit is included in the IRP5 next to source code 4116.
- IRP5/ IT3(a) documents
Prior year tax return and assessment
To ensure completeness and accuracy, utilize the preceding year’s tax return as a starting point for establishing which code parts apply to your current-year tax calculation.
- ITR12 and ITA34 (prior year)
Investment income (local interest income, foreign interest income, foreign dividends)
Financial institutions will issue you an IT3(b) certificate, which will show your investment income. Individual taxpayers are entitled to an R23 800 local interest exemption, or R34 500 if they are over 65, however, they must state the full amount of local interest earned on their ITR12 return, and SARS will apply the exemption on assessment.
- IT3(b) documents
Taxpayers who claim a travel allowance must keep a diary of their real business kilometres travelled. You can use a logbook on the SARS website to keep track of your travel distances. The following information about business mileage travelled must be kept at a minimum:
- Opening kilometres (refer to prior year submitted tax return closing kilometres)
- Closing kilometres
- Date on which the travel took place
- The to and from destinations
- The kilometres travelled
- The reason for the travel
Remember that travel expenses to and from your home are considered personal expenses and are not tax-deductible
Travel expenditures can be claimed based on either real expenses or a set cost rate (based on the purchase price of your vehicle as well as kilometres travelled).
If you prefer to base your trip expenses on real charges, you must keep precise records for the following costs:
- Fuel and oil
- Maintenance and repairs
- Insurance and licence fee
- Wear and tear (limited to purchase price of R595 000 over seven years) or lease payments
- Finance charges
If your company furnished you with a vehicle, you can minimize the value of the fringe benefit on the date of assessment by keeping an exact logbook of kilometres travelled for business purposes, as well as accurate records of the prices of fuel and oil, maintenance, and insurance that you paid.
- Proof of invoices for qualifying costs incurred
Your medical scheme fees and qualifying medical expenses
You must get a statement from the medical plan that includes the following information:
- Contribution portion paid by you
- The number of people that receive assistance each month.
- The total amount of claims that were not refunded to you after they were submitted to the fund.
If you have incurred qualifying medical expenses that were not submitted to (or recoverable from) your medical plan, you must keep track of them and save documentation that they were paid. Refer to the definition of a “qualified medical expense” under the Income Tax Act.
If you want to claim medical expenses for a disability, you’ll need to fill out and sign an ITR-DD (Confirmation of Disability) form.
- Medical scheme statement
- A list of qualifying medical expenses (retain proof of payment)
- ITR-DD form in case of a disability
Married in community of property
It’s critical to appropriately state your marital status on the first page of your return if you’re married in common property. You and your spouse split investment income (interest and dividend income), rental income from property rentals, and capital gains 50:50. However, you must record the whole amount of interest, dividends, rental income, and capital gains generated by you and your spouse on your tax return, and SARS will allocate the funds.
Income tax certificates for retirement annuity contributions made
A certificate (e.g., an IT3(f) income tax certificate) will be issued by the institution to which your contributions are made, confirming the total contributions made for the year. Proof of your retirement annuity contributions must be kept on file.
- IT3(f) certificate
- Proof of retirement annuity contributions made
Capital gains transactions
The following documents must be kept on hand to aid in the computation of the base cost of a capital asset sold.
- Documentation supporting the acquisition cost
- Invoices supporting valuation costs incurred
- Invoices supporting direct costs of acquisition or disposal
- Invoices in support of costs to defend legal title
- Costs incurred with regards to improvements or enhancements to the value of the asset
- Purchase agreement
- Invoices supporting valuation costs, invoices supporting direct costs of acquisition or disposal (such as remuneration paid to valuer, auctioneer, consultant, legal advisor, transfer costs, certificate of electrical installation, stamp duty, advertising costs to find a seller or a buyer, sales commission, installation costs)
- Invoices in support of legal fees incurred in resisting expropriation, invoices in support of alterations and improvements provided that the improvements are still reflected in the state of the asset on the date of disposal
- To support the proceeds of the asset sold, the sales agreement needs to be retained
- Documents and receipts for commission-related expenditure (including a logbook to claim business travel expenses)
Trading and farming activities
- Financial statements
- Section 18A certificates for all qualifying donations made
Expenses against local and/or foreign subsistence allowance
You must keep a thorough schedule if you incurred expenses for which you received a subsistence allowance.
- A detailed schedule contains the following information:
- The period in respect of which the expenses were claimed
- The destination where the money was spent
- The total number of days for which expenses were claimed
- Specify whether local or foreign expenditure
- Receipts for the expenses must be retained in support of the claim, should they be requested by SARS
Home office expenses
It is illegal to deduct any expenses related to a dwelling or domestic premises unless a portion of the residence or premises is used for business activities. Supporting evidence is required in order to substantiate a claim for home office expenses.
- A service contract with your employer that stipulates that you must, in terms of the requirements of the service contract, maintain a study at your private residence.
- A schedule detailing the following must be prepared and retained for a period of five years, should SARS request it:
- The nature of the occupation and why it is necessary to maintain a study at home
- Does your employer place an office at your disposal at the workplace?
- Full details of any restrictions in the use of this office are to be furnished, as well as a letter of confirmation from your employer
- Is the work of such a nature that you are expected to work at home after hours?
- Full details of how frequently the home study is used as well as a statement confirming the use thereof is required from your employer
- Are you required to use the home study to interview or supply information to clients or employees after hours?
- Is the home study specifically equipped for purposes of the trade?
- Is the study used regularly and exclusively for your work?
- To what extent is the study indispensable to the proper carrying out of your tasks?
Accounting or administration fees for the completion of your income tax return
When commissions, local interest, royalties, other receipts and accruals, foreign dividends, foreign interest, other foreign income, pension annuity, retirement annuity, and purchased annuity are relevant, these fees can be claimed.
- Invoice for professional fees which were actually paid or are payable for the completion of the income tax return
Despite the fact that this information is required to complete your tax return, no paperwork is required to be attached to the return when it is submitted to SARS. From the date of submission of the return, you must preserve all supporting paperwork for five years.
Let’s take the “pain” out of “painful” during tax season by putting all of the necessary documentation in order before eFiling. Didiserv is always ready to help