SARS E-Filing 2016

[vash87]

I suspected as much, however I've never had an arrangement with my employers to pay my RA directly and the wording of the second part of eFiling popup message is a bit misleading.

Even if they don't pay your RA directly, if they know about your RA they could be including it as a deduction so that they can factor your tax rebate into they amount of PAYE they pay on your behalf. This way you essentially get your RA tax rebate on an ongoing basis instead of waiting for a lump sum at tax return time.

What would you like to know about provident funds? Feel free to ask me anything. I can tell you that unless you work for a company with a provident fund, there's no way you can get one.

 

[j4ck455]

Even if they don't pay your RA directly, if they know about your RA they could be including it as a deduction so that they can factor your tax rebate into they amount of PAYE they pay on your behalf. This way you essentially get your RA tax rebate on an ongoing basis instead of waiting for a lump sum at tax return time.

Isn't that a bit risky for a company to do as the company is required by law to deduct tax and is then deducting less tax by blindly trusting that the employee is keeping up to date with their RA contributions? What happens to the company at the end of the tax year if it turns out that the employee paid less into their RA than the company made provision for when calculating PAYE due to SARS?

What would you like to know about provident funds? Feel free to ask me anything. I can tell you that unless you work for a company with a provident fund, there's no way you can get one.

I know [-]almost[/-] nothing about provident funds, anything you can tell me would be news to me.

The only thing I do know is that there was some fight between the unions and former Minister of Finance Nhlanhla Nene over provident funds.

AFAIK my employer does not have a provident fund (whatever that may be).

 

[AchmatK]

Isn't that a bit risky for a company to do as the company is required by law to deduct tax and is then deducting less tax by blindly trusting that the employee is keeping up to date with their RA contributions? What happens to the company at the end of the tax year if it turns out that the employee paid less into their RA than the company made provision for when calculating PAYE due to SARS?







I know [-]almost[/-] nothing about provident funds, anything you can tell me would be news to me.



The only thing I do know is that there was some fight between the unions and former Minister of Finance Nhlanhla Nene over provident funds.



AFAIK my employer does not have a provident fund (whatever that may be).

Employees are allowed to request that the employer take any RA payments that they do personally into account when calculating the PAYE. The law allows for this.

It's up to the employer to put measures in place to prevent an employee from lying about it. They could request a copy of the RA statement every quarter as an example. I'm almost certain that an employer cannot refuse such a request from an employee. You can also do this for medical aid provided that the employee is the main member.

If an employee lied, he would be liable to SARS for the PAYE on assessment.

 

[j4ck455]

Employees are allowed to request that the employer take any RA payments that they do personally into account when calculating the PAYE. The law allows for this.

[highlight]It's up to the employer to put measures in place to prevent an employee from lying about it[/highlight]. They could request a copy of the RA statement every quarter as an example. I'm almost certain that an employer cannot refuse such a request from an employee. You can also do this for medical aid provided that the employee is the main member.

If an employee lied, he would be liable to SARS for the PAYE on assessment.

Doesn't that also imply/mean that an employer is equally liable and that SARS can take action against both the employee and the employer?

 

[diapason]

I suspected as much, however I've never had an arrangement with my employers to pay my RA directly and the wording of the second part of eFiling popup message is a bit misleading.



I need to get my act together and start pumping more money into my RA, the only thing that has stopped me from doing it is that my RA has consistently under performed and I've had it for a long time, but the tax benefits of paying extra money into the RA might be worth it.

Is there a good source of info for provident funds somewhere (preferably for dummies)?

If you've had your RA for a long time, it's probably one of the expensive, old-fashioned life assurance RAs. If you're looking at paying extra, rather open a new unit trust based RA where you can choose the underlying investments. Just check the costs. You can set up these UT based RAs yourself. There is no need to use an advisor or broker. There is no sense in pouring more money in to an underperforming RA.

Unfortunately it may be difficult to get out of your existing RA without incurring penalties, otherwise you could have transferred those funds to another RA. Still, it may be worth asking about it.

 

[j4ck455]

If you've had your RA for a long time, it's probably one of the expensive, old-fashioned life assurance RAs. If you're looking at paying extra, rather open a new unit trust based RA where you can choose the underlying investments. Just check the costs. You can set up these UT based RAs yourself. There is no need to use an advisor or broker. There is no sense in pouring more money in to an underperforming RA.

Unfortunately it may be difficult to get out of your existing RA without incurring penalties, otherwise you could have transferred those funds to another RA. Still, it may be worth asking about it.

Thanks, will do so.

 

[StrontiumDog]

If you've had your RA for a long time, it's probably one of the expensive, old-fashioned life assurance RAs. If you're looking at paying extra, rather open a new unit trust based RA where you can choose the underlying investments. Just check the costs. You can set up these UT based RAs yourself. There is no need to use an advisor or broker. There is no sense in pouring more money in to an underperforming RA.
<snip>

Can you point us in the right direction?

 

[AchmatK]

Can you point us in the right direction?

Www.10x.co.za

 

[diapason]

Thanks, will do so.

I forgot to mention that with the unit trust based RAs, you can stop and start payments whenever you want without penalties, or if you had a lump sum available, eg a bonus, you could put that into your RA. Anything which exceeds the 27.5%pa of all your retirement funding will be carried forward as a tax credit for years when you are under that percentage. When you get to the point that you want to annuitise, any tax credit not used can be used to increase the tax-free lump sum. All earnings within the RA accumulate tax free.

Another advantage of having more than one RA is that you don't have to annuitise everything at the same time. Your existing RA probably has a set retirement date. Nowadays, you can let your newer type annuities go to whatever age you choose. Perhaps you reach retirement age but decide that you don't yet need any income from your newer annuities. You can continue contributing, or stop contributing and just let your funds grow until you need them. Very useful for financial planning.

 

[diapason]

Www.10x.co.za

10X is relatively expensive until there is a lot of money involved. www.sygnia.co.za has certain of their funds where their fees are about 0.45%.

 

[diapason]

Can you point us in the right direction?

There are many, eg Sygnia, Coronation, Allan Gray, Foord, 10X, even the life assurance companies via their Wealth/Financial sections, etc. They sll have different minima for debit orders, also for lump sums. And to repeat myself - look at the costs!

Do your own research and apply online. Don't pay an advisor for what you can do yourself.

 

[Cius]

Finally got my return filed on the last day. Been working on getting a family member through the SARS disability approval process for the past year and figured out the process only recently and got it done and dusted with the doc last Wed. Fortunately that means my return looks like it went from peanuts to a very serious amount of money (I did fill in my return a while back and saved it without submitting). Figured they would audit me as I was told they do that for all new disability claims but for some reason they did not.

My status is now in Assesment Received. I wonder how long until they actually process and if they will change their mind about the audit?

 

[vash87]

I know [-]almost[/-] nothing about provident funds, anything you can tell me would be news to me.

The only thing I do know is that there was some fight between the unions and former Minister of Finance Nhlanhla Nene over provident funds.

AFAIK my employer does not have a provident fund (whatever that may be).

There are 3 categories of retirement funds - pension funds, provident funds and retirement annuities. Pension/provident funds can only be access as part of an employee benefit scheme and are therefor linked to your employer. Retirement annuities can be provided as employee benefit but also started by an individual in their personal capacity.

Pension funds and RA's are pretty much exactly the same thing besides for the fact that you can't belong to a personal pension fund. The tax deductibility of contributions works the same way, and they both work the same at retirement - you can take out maximum of one third as a lump sum and the remaining two thirds have to be used to purchase an income bearing annuity of some kind.

On the other hand, this rule doesn't apply to provident funds which means an individual can take it all as a lump-sum (minus tax) when they retire. This normally doesn't work out very well for the retiree, since large lump-sums are easily squandered if you don't know what you're doing..

 

[vash87]

Finally got my return filed on the last day. Been working on getting a family member through the SARS disability approval process for the past year and figured out the process only recently and got it done and dusted with the doc last Wed. Fortunately that means my return looks like it went from peanuts to a very serious amount of money (I did fill in my return a while back and saved it without submitting). Figured they would audit me as I was told they do that for all new disability claims but for some reason they did not.

My status is now in Assesment Received. I wonder how long until they actually process and if they will change their mind about the audit?

If the IT34 said your return hasn't been selected for verification, and you don't receive some kind of letter in the next 3 days or so you should be in the clear. Assuming they don't audit you should get paid out within a week or so.

 

[supersunbird]

I forgot to mention that with the unit trust based RAs, you can stop and start payments whenever you want without penalties, or if you had a lump sum available, eg a bonus, you could put that into your RA. Anything which exceeds the 27.5%pa of all your retirement funding will be carried forward as a tax credit for years when you are under that percentage. When you get to the point that you want to annuitise, any tax credit not used can be used to increase the tax-free lump sum. All earnings within the RA accumulate tax free.

Another advantage of having more than one RA is that you don't have to annuitise everything at the same time. Your existing RA probably has a set retirement date. Nowadays, you can let your newer type annuities go to whatever age you choose. Perhaps you reach retirement age but decide that you don't yet need any income from your newer annuities. You can continue contributing, or stop contributing and just let your funds grow until you need them. Very useful for financial planning.

Back when it was 15% of non taxable income (and this e-filing year still) I've rolled over R12 000 by now.

They have confirmed that the roll over will be carried forward and thus it will be as if you contributed 27.5% even if you didn't (and obviously if the roll over makes it 27.5% of income), and what exceeds 27.5% will be rolled over as usual.

 

[j4ck455]

@signates, @diapason, @vash87

Thanks for the great advice

 

[StrontiumDog]

Got my SARS refund this morning. Thanks Tom Moyane

 

[d0b33]

@signates, @diapason, @vash87

Thanks for the great advice

Yes thanks for the advice!

Although... I might end up asking the same questions come next year

 

[Cius]

OK so payment came through and was not audited despite being a new disability claim. My tax lady says that is very lucky and may be due to the amount being a "relatively" small amount in SARS speak. That being said it was odd. My daughter had medical bills that the medical aid did not cover amounting to a little over 17K for 2015. So I figured my return would be my tax rate multiplied by the 17K, so say 30% to 40% of 17K or something therabouts. What actually happened is my return increased by about 20K. Really not sure how that works but they paid back all my additional expenses on my daughter plus some.

The only thing I can think of to explain this is that perhaps once you qualify for disability it also impacts the main 7.5% medical limit as my medical aid payments are much more than that. If I am getting back for that too then it makes sense, otherwise I am really not sure. Anyways, not gonna complain. Getting a tax return of that size is amazing after years of getting paltry amounts. Next year I suspect my daughters expenses above and beyond what the medical aid has paid will be closer to 100K so I will be interested to see what that return looks like and if they will audit that one!

 

[AchmatK]

Just keep all the documents as SARs can reopen an already assessed tax return.

Had a return from 2013 reopened and documents requested including the current year before a refund was paid out.