Warning : income tax and the two pot retirement system
When is it not necessary to submit an income tax return?
Taxpayers do not need to submit a tax return if one of the following requirements are met:
- Income was received from one source, i.e one employer
- Income for the financial year was less than R500 000
- Your income does not include any allowance
- Interest received for the financial year was less than R23 800
- If a notice of auto assessment was received from SARS
Important to note!
The first point is important to note. Taxpayers do not need to file an income tax return if the income was received from one source. When a taxpayer makes a withdrawal from the retirement fund’s two pot system, the fund will apply at SARS for a tax directive. SARS will then indicate the tax that has to be deducted. At the end of the financial year, the retirement fund will then issue an IRP5 to every taxpayer who made a withdrawal.
Thus, this means that the taxpayer will have two IRP5’s on his/her tax return. This then cancels the first requirement, which means that an income tax return has to be submitted.
What happens if you don’t submit?
In the case where a tax return is not submitted, SARS will impose penalties on the taxpayer. The penalty is usually R250 per month for every return that is not submitted. To avoid the collection process being implemented by SARS, the outstanding return will have to be submitted and the admin penalties paid.
It is thus important to ensure that your taxes are up to date. Click here if you need more information.
