Last year almost one million taxpayers did not submit a tax return because they earned less than R120 000 during the year. While many of these employees rightly rejoiced in the fact that they may stay below SARS’s radar, others sadly missed out on a welcome cash-back from the taxman. How can this be?

Employees who earn less than R120 000 per year, have a single employer, pay PAYE and have no additional income or deductions other than those on their tax certificates, do not have to submit a return. Unfortunately, many taxpayers are not aware that they have tax-deductible expenses that do not appear on their certificates. By not filing a return, they never inform SARS of the additional deductions and miss their refund. Their employers, unknowingly, have paid more tax on the employees’ behalf than was necessary.

There are many deductions that are outside the employer’s field of vision, but the most relevant ones are private retirement fund contributions, donations and medical expenses.

If the employer is unaware that the employee is contributing to his own retirement annuity (RA), for example, the deductible portion of the RA premium would not appear on the employer’s tax certificate. The deductible amount varies, depending on the size of the employeeís salary, and whether he’s also contributing to an employer fund, but the employee should be able to deduct at least R1 750 of his RA premium from his taxable income.

Donations to public benefit organisations (section 18A) can also be deducted, up to an annual limit. Many schools and churches are registered as section 18A organisations – you may be surprised at how the taxman rewards your generosity towards these institutions.

Wishing you something back at the end of this filing season!

Tags: deductions, tax return, to file or not to file

This entry was posted on Wednesday, September 23rd, 2009 at 4:09 pm and is filed under Money matters. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.