Tax season: How to get a refund
Many people are looking forward to July 1 as this is the date SARS opens their systems for individuals to file their personal income tax return.
To get a higher return, ensure that you claim all deductions you are entitled to on your tax return.
Here are a few checks that could be performed to ensure the best outcome of your tax return.
Claim for your medical aid contributions where you have your own medical aid. If you have a medical aid through your employer at least one of the following codes will be on your IRP5; 4005, 4474, 3810.
This means that the benefit you are entitled to has already been taken into account during the year of assessment. If this is the case, do not add the medical contributions on your income tax return again. This can lead to SARS issuing a penalty. If these codes are not on your IPR5 and you have a medical aid, then this means that the taxpayer has not yet received the benefit. In this case, make sure you complete this section of the form correctly in order to collect your benefit in full.
Where a taxpayer is over the age of 65, full medical contributions as well as 100 per cent of medical bills unpaid by the medical aid may be deducted against a taxpayer’s income. Make sure you have all your receipts and make sure to keep these on file for a period of five years after your return has been submitted. If you are not sure about which medical expenses are claimable, ask your tax practitioner.
A person diagnosed with a disability may also claim full medical aid contributions as well as 100% of medical bills unpaid by the medical aid. A doctor is required to complete a certain form which must be kept on file. There is a definition to disability but people who have lost limbs or who suffer from a mental disorder (such as depression) are defined as disabled. The requirement is that the day to day activities of an individual must be severely limited or hampered in order to claim this benefit. A deaf or blind person will hence qualify. The income tax act allows any person whose spouse or dependents meet these requirements to quality for this tax benefit.
Make sure the above is well documented. A tax practitioner should keep all evidence of this nature on file and should be in a position to quickly supply this information upon SARS request.
Claim for a retirement annuity
If a tax payer has a retirement annuity (not to be confused with a provident or pension fund) make sure that this section of the form is also completed in order to obtain your benefit for contributing to a retirement annuity fund.
If you do not have a retirement annuity and also do not have a pension fund, consider getting a retirement annuity for the tax benefit. Speak to your tax practitioner and plan your financial situation in order to maximise your personal income tax return.
A travel allowance
If a taxpayer has code 3701 on their IPR5, make sure to keep a logbook. SARS has changed the way this works as of March 1, 2010. The rule is no logbook, no claim. Make sure the logbook is to SARS satisfaction. If you are not sure, ask a tax consultant to assist before a tax period starts. SARS determines the allowable rate per kilometre and is based on the value of the vehicle. Here again speak to your tax practitioner before filing an income tax return. A practitioner should guide a taxpayer on their salary structure.
q Information courtesy of www.fmjfinancial.co.za.
