Five Reasons You Should Use a Registered Tax Practitioner

Artical link: https://www.moneyweb.co.za/mymoney/moneyweb-tax/five-reasons-you-should-use-a-registered-tax-practitioner/ 

Each year there are several changes in tax legislation, and keeping up with and understanding these can be challenging. Tax practitioners can help ensure taxpayers don’t underclaim in their tax returns and thereby avoid a Sars audit.

The South African Revenue Service (Sars) has implemented some big changes to personal income tax returns, trust tax returns and pay-as-you-earn (PAYE) tax penalties for the 2023 filing season that affect individual taxpayers, trustees, employers and tax practitioners.

Each year there are several changes in tax legislation, which means keeping up to date with and understanding the legal intricacies can be challenging. Fortunately, there are experts who can navigate this quagmire. Tax practitioners keep informed about all tax legislation updates – so that you don’t have to.

The purpose of tax practitioners is to provide you with assurance that you don’t underclaim and that you are safe and sound from a Sars audit.  

It is important to check that your tax practitioner is registered with a recognised controlling body – this is a legal requirement from Sars. 

Here are five reasons you should use a registered tax practitioner this filing season.

1. Have you been auto-assessed? Best to double-check

Last year, Sars commenced issuing ‘original estimated assessments’ as part of the auto-assessment process to taxpayers whose tax affairs are seemingly uncomplicated. While this may take the hassle out of processing your taxes, Sars’s auto assessment may not be correct.

Consider getting a tax practitioner to check your auto-assessed tax return. If you are not in agreement with the auto assessment, you will have to file a tax return, and a tax practitioner can do this on your behalf. This will ensure that you’ve claimed for all possible allowable expenses and can avoid penalties by declaring income and deductions accurately.

2. Get to grips with personal income tax enhancements

Sars has instituted various personal income tax enhancements this filing season that can be difficult to understand and calculate, in which case a registered tax practitioner can assist you in processing your tax return correctly.

Assessment for spouses married in community of property:

• Taxpayers who are married in community of property are each taxed on half of their passive income, including interest on investments, dividends, rental income and capital gains.
• For the 2023 filing season, Sars has retrieved the ‘married in community of property’ status from each taxpayer’s previous declaration and has collaborated with the Department of Home Affairs to confirm their marital status.
• Where Sars successfully matches the spouses and [they] have interest-bearing investments, Sars will replicate the interest investment certificate on both spouses’ returns (based on a 50/50 division) where they will each be taxed on half of the total passive income upon assessment – this illustrates the fact that cross-checking and calculating passive income can be complex.

Foreign income disclosure: 

• South African resident taxpayers must declare foreign-derived income. There are three new fields on the 2023 tax return based on certain exemptions – for example, if people are paying tax in another country and/or working in both South Africa and abroad, it’s important to select and complete the correct field.

Statement of assets and liabilities: 

• Provisional taxpayers with business interests are required to declare their assets and liabilities (based on cost) in their tax returns each year – those with assets above R50 million must declare specified assets at market value on their 2023 tax return.

3. Navigate trust income tax return enhancements

Submitting trust tax returns can be very complicated, and it would be best to use a registered tax practitioner to file this type of return for you.

The Sars eFiling Income Tax Return Wizard (on the form wizard tab) has been updated to include additional questions about the number of trusts and to determine if any local or foreign amount(s) were vested in the trust as a beneficiary of another trust or are deemed to have accrued during the year of assessment. Based on these questions, the required number of fields for these distributions will be opened in the return. 

There is a new, simplified return for passive trusts, and the correct type of return must be selected on the Tax Return Wizard.

Other enhancements to the trust return (ITR12T) include a new field for credit agreements and debtors’ allowances, ‘lay byes’, and a beneficial ownership declaration. All mandatory supporting documents must be uploaded and submitted with the trust return.

4. Avoid PAYE underestimation penalties

Tax practitioners can help you avoid penalties or, if they are unavoidable, assist with administrative penalty adjustments. A monthly administrative penalty of 10% of the total of the employee’s tax amount as estimated by Sars (on readily available information) may be payable if the total amount of employee tax deducted or withheld, or that should have been deducted or withheld for the period, is unknown.  

5. You could get a refund within 72 hours (if one is due)

In preparation for the 2023 filing season, Sars sent out a statement saying it is taking a hard line with tax practitioners who submit inaccurate declarations, while adding: “The vast majority of tax returns filed by tax practitioners on behalf of the taxpayers they represent are accurate and complete.

Considering the complexities associated with certain types of tax returns, it’s a good idea to have a registered tax practitioner in your corner. Recognised controlling bodies ensure that tax practitioners stay on the straight and narrow. 

Emily Gomes (ICB Senior Bookkeeper)

Senior Bookkeeper