On Tuesday, 4 June 2019, the South African Revenue Service (SARS) announced that it has increased the tax return threshold from R350 000 to R500 000. Individuals earning less than R500 000 will not need to submit personal income tax returns (ITR12).

“It is a large increase,” explains Prof Herman Viviers from the North-West University (NWU). “People should be very wary not simply ignore filing their normal tax returns as there is always the possibility of getting a tax refund due to additional tax deductions and/or tax credits only allowed upon assessment.”

Prof Viviers also mentions that, although individuals might earn less than R500 000 a year, they should take into account their retirement annuity fund contributions and allowances (received from an employer). These usually result in additional deductions to be claimed upon assessment, which could result in a possible tax refund.

He says individuals above the age of 65 with large medical expenses not recoverable from their medical schemes, also need to declare these on their income tax return in order to qualify for the additional medical expenditure tax credit to be claimed upon assessment. Individuals will lose out on these deductions and tax credits if they do not submit their tax returns.

“The main reason for SARS lifting the threshold is that it lessens their administrative burden of processing tax returns from the lower income-earning group. The fewer returns submitted -  the less admin for them. It also holds the same administrative benefits for the taxpayer. But, as I said, individuals should be cautious.”

“People should evaluate their tax position and although not submitting their returns might seem like an enticing prospect, they should evaluate if they are in line for deductions and tax credits,” says Prof Viviers.

If uncertain, individuals should consult with a registered tax practitioner, as the non-submission of tax returns could results in non-compliance penalties to be levied in terms of the Tax Administration Act.

The Commissioner of SARS, Edward Kieswetter, did say that there are exceptions to the R500 000 rule. They are:

• Income can only be received from one employer.

• There must be no other income such as from a car allowance, business income, taxable income or money made from renting.

• There must be no additional deductible allowances, such as medical expenses, travel expenses or retirement annuities.

For more information contact Prof Herman Viviers at 018 299 1474 or herman.viviers@nwu.ac.za.

 Prof Herman Viviers