Tax help IT3

[lilggg]

Hi, i have an investment account with ABSA and received an IT3(b) Income tax certificate, showing taxable interest received of R1100. I havn't registered as a tax payer yet and have no idea what to do. I run a website with a friend in the US and get paid in cash whenever he comes down every month, so if i register i have no idea what forms to fill in or how to prove how much i'm earning. What i earn is commission based so the income changes every month. Please can someone advise me on what to do. Thanks

[lilggg]

Thanks for reply, what income receipts? Monthly bank statements? I get paid in cash and then deposit it myself. I've only been receiving an income for a few months, but this IT3 notice gave me a wake up call to sort this out.

[Greg C]

Thanks for reply, what income receipts? Monthly bank statements? I get paid in cash and then deposit it myself. I've only been receiving an income for a few months, but this IT3 notice gave me a wake up call to sort this out.

If you cant originally get the receipts(which you would have issued for the income) your bank statements will suffice.
Seeing as you get paid in cash,keep all the deposit slips for proof of income.

The taxable interest income means this very simply.

1100 exceeded the amount that is exempt ie R22300 so it would seem you earned overall interest of R23400 for this last tax year.

In summary, declare your income using your deposit slips any records you have of income,declare the type of earner you are, are you a business owner etc,if you are an employee get your tax number,register for efiling online.
Future income(from your business,ie your website) really should register it as a business,as it is taxed differently.

Hope all this helps

[Celine]

If you cant originally get the receipts(which you would have issued for the income) your bank statements will suffice.
Seeing as you get paid in cash,keep all the deposit slips for proof of income.

The taxable interest income means this very simply.

1100 exceeded the amount that is exempt ie R22300 so it would seem you earned overall interest of R23400 for this last tax year.

In summary, declare your income using your deposit slips any records you have of income,declare the type of earner you are, are you a business owner etc,if you are an employee get your tax number,register for efiling online.
Future income(from your business,ie your website) really should register it as a business,as it is taxed differently.

Hope all this helps

greg i don't mean to sound rude but i think you need to do some more homework or something. the OP said he received interest income of R1100. that means it is earned for the entire year. an IT 3 certificate will be issued for interest earned for an entire year and will be declared as such. therefore this R1100 is exempt.

might i suggest you stop giving people your advise until you are up to speed with tax laws as such.

[Greg C]

greg i don't mean to sound rude but i think you need to do some more homework or something. the OP said he received interest income of R1100. that means it is earned for the entire year. an IT 3 certificate will be issued for interest earned for an entire year and will be declared as such. therefore this R1100 is exempt.

might i suggest you stop giving people your advise until you are up to speed with tax laws as such.

Dear Celine,

Lets first start by saying it was in fact your intention to be rude and you did an exceptional job.

2ndly I would like to point your attention to what I said to him as well as the amount of information given to me on his situation. I would also like you to go to a blog topic within this very forum,of mine, within the business and finance section. I am sure with your ability to be so critical I can assume your observation skills will suffice in searching for it.

LOCAL INTEREST IS EXEMPT UP TO 22300 BUT INCLUDED IN GROSS INCOME
anything over and above the natural person exemption of 22300(possibly the 1100 under the info given) and is therefore TAXABLE.
Quoting from the 'scenario' given he said the taxable portion.If he received only R1100 during the year of course its not taxable.But he still needs to declare it.Nothing of what I said is incorrect in anyway regarding tax law but rather to non specifics given in his scenario or a possible misinterpretation of his current scenario

I have done my homework,more so that I have an honours in Tax but thank you for identifying to me that it is in fact difficult to do someones tax and give 100% accurate advice on the face of short brief descriptions given by respondents,questions that are sometimes rather vague and given no real figure or paperwork via the respectable parties involved.

Yours appreciatively

Greg

[lilggg]

Thanks for the advice, that was my fault. Interest Capatilized R1069, Interest Accrued R105, Taxable Interest R1175. R1175 is about what i received in total interest for the year. The total in the account is over R22300 though.

Here is where the problem started i think. I received a fair amount of money from my gran's will when she died, my mom and i received half each. The money was deposited straight into my savings account, and i think i was still in school so i never ever thought about tax implications and thought it was probably already paid for before receiving the money. However my mother got a letter from SARS saying she owes them for the money she got. I am not registered so never received anything. I took some of the money and opened an investment account. Then i started getting this small income and should have registered then and started keeping everything. Hope that gives you more information.

[Celine]

lilgg the amount of R1175 interest received is not taxable. the amount of R22300 is capital and is also not taxable.

with regards to your income you are receiving you need to register with SARS and declare the income on your return. about 2 years ago SARS issued a notice stating that anyone receiving income must be registered for tax purposes. it doesn't matter how much you earn now you need to be registered. so just download the IT77 on the website and take the relevant documentation to your nearest SARS office and wait for your number.

with regards to your mom having to pay in, she probably has other income she is receiving over and above her regular income. without knowing what her interest income is it will be difficult to say why she has to pay in.

[Celine]

Dear Celine,



LOCAL INTEREST IS EXEMPT UP TO 22300 BUT INCLUDED IN GROSS INCOME
anything over and above the natural person exemption of 22300(possibly the 1100 under the info given) and is therefore TAXABLE.
Quoting from the 'scenario' given he said the taxable portion.If he received only R1100 during the year of course its not taxable.But he still needs to declare it.Nothing of what I said is incorrect in anyway regarding tax law but rather to non specifics given in his scenario or a possible misinterpretation of his current scenario



Yours appreciatively

Greg

greg - you do not include interest in other income to get to the exemption. interest is looked at seperately. what you are saying here is that he must include his other income into his interest income and if it is above the R22 500 the balance is taxable. that is incorrect.

interest is interest and therefore will be calculated as follows:

interest income - R30 000
less exemption - R22 500
therefore the taxable portion is R7500

salary, dividends, business income etc is in a different category and calculated accordingly. the interest will be shown on the assessment as having been included only to show that it is declared correctly. the balance of R7500 will be included in the taxable income to determine the tax payable.

[Just_Ice]

Greg is quite right, Celine, you're also correct but you have just misread his post it seems. In fact your both arguing the same point
Interest income must be shown as part of his gross income (so the interest in addition to the rest he earned will be in gross income).
But the interest portion of his gross income (up to a total of R22300) is exempt.

[lilggg]

I downloaded the IT77 form but there's a few thing's i'm not sure what to fill in. 1. Employer particulars, i can't fill it in because he lives in america, and i don't have a PAYE number. 2. Do you need to register for provisional tax? No idea. 3. Nature of income, do i fill in salary or foreign income? 4. Can i just get bank statements from the last 3 years as proof of income? Sorry for all the questions but this is stressing me out.

[Greg C]

greg - you do not include interest in other income to get to the exemption. interest is looked at seperately. what you are saying here is that he must include his other income into his interest income and if it is above the R22 500 the balance is taxable. that is incorrect.

interest is interest and therefore will be calculated as follows:

interest income - R30 000
less exemption - R22 500
therefore the taxable portion is R7500

salary, dividends, business income etc is in a different category and calculated accordingly. the interest will be shown on the assessment as having been included only to show that it is declared correctly. the balance of R7500 will be included in the taxable income to determine the tax payable.

Again Celine Nowhere did I say 'Other Income'.I have no clue where you saw that in any of my posts. Again nothing of what I posted is any different to what is fact or in fact any different to what you are trying to say.

[Greg C]

Greg is quite right, Celine, you're also correct but you have just misread his post it seems. In fact your both arguing the same point
Interest income must be shown as part of his gross income (so the interest in addition to the rest he earned will be in gross income).
But the interest portion of his gross income (up to a total of R22300) is exempt.

Thank goodness someone saw. Was starting to get frustrated.

[Belza81]

From a 12 year experience as a Chartered Accountant and dealing with tax on a daily basis, I just want to confirm that Greg is 100% correct!!
The main objective actually when submitting a tax return is indeed not the net result of an amount payable/receivable and
Income below exemption / Net result of taxable income below threshold etc. DOES NOT = no need to submit an income tax return.
Interest received must always be declared. In fact income received is a type of income which actually makes the submission of an income tax return obligatory!
So declare the taxable interest as per IT3 received from the bank, as a copy of the IT3's is also submitted via the bank to SARS (or if not yet, then SARS is definitely busy getting this system in place) so they will have the IT3 on file to compare to income you declare!
Rather safe than sorry with SARS not hesitating to deal out admin penalties left and right!

[Celine]

From a 12 year experience as a Chartered Accountant and dealing with tax on a daily basis, I just want to confirm that Greg is 100% correct!!
The main objective actually when submitting a tax return is indeed not the net result of an amount payable/receivable and
Income below exemption / Net result of taxable income below threshold etc. DOES NOT = no need to submit an income tax return.
Interest received must always be declared. In fact income received is a type of income which actually makes the submission of an income tax return obligatory!
So declare the taxable interest as per IT3 received from the bank, as a copy of the IT3's is also submitted via the bank to SARS (or if not yet, then SARS is definitely busy getting this system in place) so they will have the IT3 on file to compare to income you declare!
Rather safe than sorry with SARS not hesitating to deal out admin penalties left and right!

and as an ex SARS assessor and auditor i'm telling you to submit your return whether or not you are below the income threshold. people are too laid back and wanting to blame the "income threshold" as an excuse. having met up with some of the people who i used to be at SARS with the other day, they have confirmed that they are no longer accepting excuses and will penalise at a drop of a hat. also keep all receipts, pieces of paper, etc as they will disallow without batting an eyelid these days.

[Celine]

greg - please accept my sincere apologies. your first post i thought you had said that he must include the interest income in the gross income and then he will receive the exemption. that is why i responded with laying out the interest income the way i did and other income is then seperate.