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Why do I need to submit an Income Tax Return if my employer pays my Tax?

Posted 6 September 2012

A question often asked is, "If my boss pays over my tax then why do I have to do anything?"

If you earn below R160 000 per year, SARS does not require that you complete and submit an ITR12 tax return. HOWEVER SARS will charge you an admin penalty for not submitting a return AND if you don't mention all your deductions you can't maximise your potential refund. So rather submit a return every year and stay tax compliant. With TaxTim it's easy. Remember as well that SARS doesn't know everything about you so you need to tell them to maximise your potential refund!

In some cases if you have no other income than your salary and no other deductions and you work a full year then the PAYE paid over by your employer to SARS is almost exactly correct and you won't need to pay any further tax in, or get a refund back from SARS. In most cases however, your employer doesn't pay for all your benefits, for example medical aid or income protection. SARS won't know about the payments you made on your own until you tell them, so they require that you complete the annual ITR12 income tax return for this very purpose. If you don't submit a return then you won't be able to claim any deductions and would lose out on your tax refund.

HANDY TIP: If you haven't worked a full year at your company yet then you will definitely be entitled to a refund, even if you earn less than R160 000 per year. This is because your PAYE is calculated as if you had earned your salary over a full 12 month period. So if you didn't, you are due a refund.

Example:

You only worked for 10 months of the year
Monthly Salary - R8 000 per month
PAYE as per SARS tables - R488 per month
On your IRP5 total PAYE = 10 x R488 = R4 880

Actual Tax
(R80000 * tax rate of 18%) - primary rebate R11 440 = R2 960 which is your actual tax owing!
So by submitting your tax return you would be entitled to a refund of (R4 880 - R2 960) = R1 920

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