Tax: what is new?

THAT TIME OF YEAR AGAIN: TAX FILING SEASON HAS STARTED

The 2012 tax filing season started on 1 July and we are preparing for the completion of tax returns. Clients are advised that we shall get in touch with them shortly to confirm when we require their information so that we may meet the SARS due dates for submission.

These due dates are 23 November 2012 for non-provisional taxpayers and 31 January 2013 for provisional taxpayers. Clients are requested to assist us in keeping to these deadlines by submitting their information to us by the dates that will be communicated to them. Should any leeway be required it is imperative that you contact us in good time.

To ensure peace of mind in dealing with the taxman please make sure that you understand the information and follow the advice provided above. If you have any queries, don’t hesitate to contact either the director or the manager dealing with your affairs.

TAX CREDITS TO REPLACE MEDICAL DEDUCTIONS FOR TAXPAYERS UNDER 65

As announced in the 2011 budget, the income tax deduction for medical scheme contributions for taxpayers under the age of 65 will be converted to a tax credit as from the current tax year which started on 1 March 2012. The rationale is to ensure fairness of the system across the entire spectrum of taxpayers.

The medical tax credit is a fixed amount that will be deducted from the tax payable, thus effectively making it a cash credit. It will be applicable to a person or a dependent with or without a disability. The credit is not applicable to taxpayers older than 65; they will still be entitled to claim a deduction of the full amount of their medical scheme contributions and other approved medical expenditure.

Where medical scheme contributions are in excess of four times the total credits, a deduction against taxable income, inclusive of medical expenses not covered by the medical scheme, may still be claimed. However, only the amount in excess of 7.5% of taxable income (before this deduction), will be allowed.

For a more detailed explanation of the new system please contact our tax department at tax@asl.co.za or go to www.sars.gov.za and enter medical credit in the SEARCH box to find a document titled “Explanation of the medical tax credits”.

CHEQUE PAYMENTS TO SARS

Taxpayers who have to make large cheque payments to SARS (or to any other party, for that matter), need to take note of a new ruling by the Payments Association of South Africa (PASA), the association which is responsible for managing payment systems in South Africa.

In terms of this ruling, which comes into effect on 16 July 2012, banks will no longer accept cheque payments exceeding R500 000 in value from their clients, neither will they accept so-called “split cheque” payments, i.e. two or more simultaneous cheque payments intended to make up a single amount of  R500 000 or more.

SARS has issued a notice to inform taxpayers of this development and how it affects payments to SARS. They advise taxpayers who need to make payments that exceed R500 000 to SARS, to use either of two channels, i.e. SARS eFiling and Electronic Funds Transfer (EFT).

For more detailed information please visit www.sars.gov.za and click on the relevant notice in the IN FOCUS column.

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