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For some people, the words “tax return” conjure up images of paperwork, stress, deadlines and panic. But it doesn’t have to be this way. There are two very easy ways to file your tax return – using the SARS eFiling system or using the services of a tax consultant. We look at the differences between the two options and how to choose the best one for you.
In a nutshelleFiling is South African Revenue Service’s (SARS) online system where you can download your tax forms, complete them and submit them to SARS. Unless you are a new taxpayer, many of the fields will be prepopulated with your information such as your name, address and bank details, so it is quick and easy. All you will need are your tax certificates such as your IRP5 from your employer, and tax certificates from your medical aid and any retirement annuities you may have, so you can claim the allowed deductions. Apart from data costs and time spent, eFiling is free and you can use it at any time.
A tax consultant will collect all your tax details from you, complete the forms, file your return and deal with any queries SARS may have. You will need to pay a tax consultant a fee for their services.
So which option should you choose?Here are four important questions you can ask to help you decide.
1. How complicated is your tax?
Thami Msiza of Tax Consulting SA says tax consultants offer the most benefits when your financial affairs are complicated.
Tax returns become complicated when you earn income outside South Africa or from more than one source, such as a salary, rent from a room or apartment you let, and interest and dividends from investments. If you have a lot of potential allowances, like travel allowances, or tax deductions such as multiple contributions to retirement funds, your return can also become complicated. And if you have a lot of investments dividends, tax and capital gains tax may be applicable.
However, if you have just one source of income with a few deductions only, your tax return should be simple, easy and quick to do on eFiling.
2. How well do you know SA’s tax laws and system?
eFiling is in what Taxtim calls ‘tax speak’ so you need to have some knowledge of what you need to declare and what deductions and allowances you can claim. You also need to know which records to keep and which records to upload when you file your return.
The more familiar you are with SA’s tax system and how it works, the easier eFiling will be. eFiling has FAQs and booklets to help you complete your return, but to a tax novice they can be a little hard to understand. This could mean you don’t claim all the deductions you are entitled to.
Tax consultants are experts in their field, deal with tax matters regularly, not just once a year, and know SA tax law and SARS well.
3. Do you want to deal with SARS directly?
eFiling is available 24 hours a day, but SARS’ offices and call centre are only open in normal office hours if you have a query. Tax consultants will deal with SARS’ queries on your behalf and can assist and advise you on tax matters. If you are happy dealing with SARS, eFiling is a good option. If you prefer the services of an expert, a tax consultant may be more suited.
4. Are you good with detail?
This is really important because filling in tax forms accurately can mean the difference between a big tax bill and a tax refund.
When you file a tax return you are confronted by what taxtim calls a ‘bunch of blue blocks.’ You need to make sure you fill in the right information in the right block because it is easy to make mistakes. Kim Frost, partner at Bespoke Financial Services says she assisted a client who had filled an amount in the wrong block, and subsequently received a large tax bill. Of course, this can be rectified but that takes time and a lot of energy.
In addition, you need to carefully check the pre-populated information to see that it is correct.
Get going on eFilingIf you decide eFiling is the best option, you can go ahead and file at any time. Remember to have all the documents you may need ready at hand, and don’t forget to check and double-check that you have put the information in the correct place on the form. If you are unsure of where to start on eFiling you can make use of the different help links on the home page such as ‘Help-You-eFile’, which assists you online while you are completing your return, and ‘Call me back’ - where a consultant will call you back to assist you when they are free. You can use ‘Unsure if you have to Submit?’ link, it asks a series of questions to determine if you need to submit a tax return.
Check your tax practitioner is registered with SARS and a professional body
Choosing a tax consultantIf, on the other hand, you decide you want to use a tax consultant, make sure to pick a legitimate professional. For a start, they must be registered with SARS, and with a controlling body such as the South African Institute of Tax Practitioners. Be wary of anyone who promises a refund without looking at your tax affairs or says you only need to pay if you get a refund. Not every taxpayer will be due a refund, and a refund shouldn’t be the only reason to hire a tax consultant. We’ve got a few questions to ask below to help you assess whether they are right for you.
Final thoughtsTax season runs for a few months (starting on 1 July 2019 for eFiling and SARS MobiApp users and 1 August for paper returns) so you have some time to decide whether you file on eFiling or use a tax consultant. There are pros and cons to both, so make your decision, taking into consideration your tax needs, how complicated your tax affairs are and what you are comfortable with before you make a decision.
