The Financial Coach™ - Managing people & their emotions around money » Tax

It’s going to be a long tax season…

Gregg — Fri, 16 Jul 2010 07:08:08 +0000

My grandfather taught me that if ever I needed to write a letter in anger that it was better to write it and then wait until the next day to send it – just to check that I still felt that way and that I still wanted to say the same things when the heat of the moment had passed. It was good advice…and so it is with this post…

We currently complete and submit about 130 tax returns for clients and started submitting them as soon as the filing season opened. However, 2 weeks into the season (and 10% down) I find myself wondering if I still want to do tax for clients and if so, can clients afford to pay me to do it?

The whole aim behind efiling (as I understand it) is to simplify things and to make it easier for people to submit their returns to SARS and in thus enabling those who dont want to pay someone else to do their return to do it themselves. That’s the theory at least!

In practise it is not like this at all…if the first returns are anything to go by then SARS is in a complete mess and this is going to be a very long filing season indeed.

So far the following has happened:

8 Returns have been submitted
3 have been assessed correctly
2 have been assessed incorrectly with SARS levying incorrect penalties of R56000 & R16000 to the tax payers. They have admitted telephonically that it is an error but the process involved in getting it corrected is unbelievably complex and time consuming.
5 returns are ready to submit but of these there are 2 with outstanding tax issues from 2009 which have still not been finalised despite numerous calls and letters to SARS.
1 return has no IRP5 or any other information for the tax payer on it (and he is not even a government employee – apparently some departments’ IRP5’s are still not available).

Not a problem, we can always call the call centre (a dedicated line for tax practitioners)…

Give it a try some time – so far it has been out of service at least twice, we have been cut off twice, the “pre-populated” information that needs to be entered is not working and the average waiting time is also too long in my opinion! So if this is anything to go by then this is going to be a very long and very trying filing season.

When efiling works it is brilliant, but when it goes wrong (for whatever reason) it is awful. I just wish that SARS would be honest and admit (publicly) that there are issues with their systems and that they are working on them.

But what is going to happen (again) is that the very people that SARS are trying to help (the individual tax payers) are going to get prejudiced by the complex way of doing things – they will either have to go and stand in a very long queue outside the SARS building (which in some cases has been days long) or they are going to have to pay someone to submit their returns for them. And based on my conversations with colleagues, thanks to SARS, the price for submitting returns has just gone up!

So start saving or start standing in the queue…

SARS – just like Alice

Gregg — Fri, 26 Feb 2010 11:36:42 +0000

I had to make a trip to SARS in Cape Town this am to hand in the 6 paper provisional tax returns that I cant get on efiling – this is despite several email and telephonic requests to SARS to get them on e-filing.

As I arrived there I was greeted by the site in the picture below…

this is a many-hour queue (and it has been like this since November last year according to the SARS lady that helped me). Fortunately, I did not have to stand in line as I just needed to hand in docs and get stamped copies.

The whole exercise has got me thinking about SARS and e-filing and just how much like Alice SARS is…

For those of you who dont remember Alice (it is not a reference to the song) but rather to the little girl with the bump in the middle of her forehead. When she was good she was very good but when she was bad she was horrid!

And so it is with SARS and e-filing – when it is good it is excellent, but when it goes wrong it is awful! It is hard to argue or reason with a computer and even more so with a disinterested clerk at the other side of the call-centre telephone line.

Despite this though, e-filing is on the whole still brilliant – if you are not registered to e-file your annual and provisional tax returns then you are welcome to join the queue. Guess I will see you in August when I make my next trip to SARS to submit the few paper returns that I still cant get on e-filing – but at least I wont be waiting in any queues.

2010 – what lies ahead?

Gregg — Sun, 17 Jan 2010 10:00:21 +0000

2010, it’s finally here…

In just over 1 months time it is the end of the 2010 tax year and there are 2 important deadlines that go with this. They are:

Retirement annuities:

RA contributions need to be made before the end of Feb. This year the 28th is on a Sunday so all contributions will have to be done by the close of business on the 26th Feb in order to qualify for the 2010 tax year. But dont leave it to the last minute – get your contribution in way before that – leaving it to the last minute always creates additional and unnecessary stress.
If you are unsure about how much you can contribute, speak to your financial planner and most important of all, make sure you are using a unit trust RA. You can get into many of them at no initial fees and you are also not contractually bound in any way (this means you can make changes to the contributions without ever incurring a penalty).

Provisional tax:

This needs to be in by the 26th Feb as well…and this year SARS are applying “new” rules with respect to how the tax liabiity is calculated. Previously you could make a payment in Feb and top this up by the end of Sept…this year, however, you need to have paid 90% of your total tax liability by the end of Feb (you can still top up in Sept). Failure to pay 90% will result in heavy penalties…
If you need to pay provisional tax, make sure it is in on time and even if you have a nil return, make sure that you submit the form as well.

Gregg