The Taxman Come'th - Trying to help someone sort out their taxes after several years of nonpayment

[zolly]

TLDR: I know someone who thought they were below the tax bracket so didn't submit their earnings. Turns out they are not, but it seems its not a huge amount (I hope). Has anyone else had to deal with this and what does the process look like?

So to avoid the unnecessary/stupid comments: it's not me. I'm tax compliant.

I was talking to someone close to me recently about their parent's financial situation, specifically all the effort her dad has to put into sorting out his taxes every year. The discussion then got onto her taxes and she told me she hasn't submitted for a while because she is below the tax bracket. I politely asked for a rough number of her monthly earnings and turns out she currently earns enough that she does have to make a submission, and this may have been the case for a while.

So not only are we looking at potential back payments, but also admin fees and fines. I'm going to be helping her go through her annual income and figure out what she owes just in terms of her annual submissions, but at very least she's had a "working class" salary of as little as R6k pm (so she didn't always have to submit), but sometimes that goes up to R10k.

Has anyone else had to deal with this? Trying to get as much info on trying to resolve this as possible, before we go to SARS and have to pay the piper.

 

[3WA]

Subscribed. Trying to assist someone in s similar situation. We spoke to a SARS staff member about it and they said the first step was to file returns for each year and then see what the penalty is.

Did your person ever have tax forms (IRP5?) provided by the employer?

 

[AchmatK]

First step is to file the outstanding tax returns and have the assessments competed by sars.

Next is to apply for remission for the penalties if there are any. I've had success in having penalties waived but this is becoming more difficult now. Sars will however not waive the interest portion.

 

[zolly]

Subscribed. Trying to assist someone in s similar situation. We spoke to a SARS staff member about it and they said the first step was to file returns for each year and then see what the penalty is.

Did your person ever have tax forms (IRP5?) provided by the employer?

So they have multiple income streams. Part of it is from an employer (assuming taxes are submitted on their behalf) but they also do some work on the side to bring in some extra cash. This is where she earns at least some of her cash that pushes her from "I don't need to pay" to "oh, I owe money".

I will be getting more details in the coming days, but unfortunately I don't have a complete understanding of their financial situation yet.

 

[zolly]

First step is to file the outstanding tax returns and have the assessments competed by sars.

Next is to apply for remission for the penalties if there are any. I've had success in having penalties waived but this is becoming more difficult now. Sars will however not waive the interest portion.

Thanks. I can virtually guarantee there will be penalties, but hopefully we can do the same.

Can you explain how does the interest on penalties works? Trying to find more info on it now.

 

[gopes]

Vdp - voluntary disclosure program
Can get SARS to waive penalties. I don't think they waive interest.
Best way to get it sorted.

 

[Nerfherder]

TLDR: I know someone who thought they were below the tax bracket so didn't submit their earnings. Turns out they are not, but it seems its not a huge amount (I hope). Has anyone else had to deal with this and what does the process look like?

So to avoid the unnecessary/stupid comments: it's not me. I'm tax compliant.

I was talking to someone close to me recently about their parent's financial situation, specifically all the effort her dad has to put into sorting out his taxes every year. The discussion then got onto her taxes and she told me she hasn't submitted for a while because she is below the tax bracket. I politely asked for a rough number of her monthly earnings and turns out she currently earns enough that she does have to make a submission, and this may have been the case for a while.

So not only are we looking at potential back payments, but also admin fees and fines. I'm going to be helping her go through her annual income and figure out what she owes just in terms of her annual submissions, but at very least she's had a "working class" salary of as little as R6k pm (so she didn't always have to submit), but sometimes that goes up to R10k.

Has anyone else had to deal with this? Trying to get as much info on trying to resolve this as possible, before we go to SARS and have to pay the piper.

Did the employer/s not submit her tax documents ? Probably worth checking with them what has been submitted.

Also - don't you also only have to submit for the last 5 years ?

 

[zolly]

Did the employer/s not submit her tax documents ? Probably worth checking with them what has been submitted.

Also - don't you also only have to submit for the last 5 years ?

So they have multiple income streams. Part of it is from an employer (assuming taxes are submitted on their behalf) but they also do some work on the side to bring in some extra cash. This is where she earns at least some of her cash that pushes her from "I don't need to pay" to "oh, I owe money".

I will be getting more details in the coming days, but unfortunately I don't have a complete understanding of their financial situation yet.

No idea about 5 years limit or whatever.

 

[zolly]

Vdp - voluntary disclosure program
Can get SARS to waive penalties. I don't think they waive interest.
Best way to get it sorted.

Thanks. This is great.

 

[rh1]

So the current threshold for filing is R87300 per annum. So only the year where she met or exceeded the threshold does she start needing to file. I.e. R6K x 12 = R72, dont have to file. In fact even if she had only 3 months of 10K and 9 months of 6k she wont have to file as her earnings would only have been R84k for the year.

 

[rh1]

So the current threshold for filing is R87300 per annum. So only the year where she met or exceeded the threshold does she start needing to file. I.e. R6K x 12 = R72, dont have to file. In fact even if she had only 3 months of 10K and 9 months of 6k she wont have to file as her earnings would only have been R84k for the year.

Sorry talking kak, let me just check something and revert.

 

[zolly]

So the current threshold for filing is R87300 per annum. So only the year where she met or exceeded the threshold does she start needing to file. I.e. R6K x 12 = R72, dont have to file. In fact even if she had only 3 months of 10K and 9 months of 6k she wont have to file as her earnings would only have been R84k for the year.

Thanks. I've sent her a reminder to go back and start totaling her yearly income since the last time she had an employer paying all her taxes. This will help figure out what years may require back pay and which ones don't.

 

[zolly]

Sorry talking kak, let me just check something and revert.

Seems to be corrrect.

Personal Income Tax | South African Revenue Service

What is it? Income tax is the normal tax which is paid on your taxable income. Examples of amounts an individual may receive, and from which taxable income is determined, include the following – Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable...

www.sars.gov.za

 

[rh1]

Hi Zolly

Here is questionairre, that she must complete and it will determine if she has to submit a return:

Do you need to submit a return? | South African Revenue Service

Not sure whether you must submit an Income Tax Return (ITR12)? Answer these simple questions and find out. Top Tip: If you would like to make changes to any of your responses on the questionnaire, you need to refresh the page. Disclaimer: What is contained in this questionnaire is intended as...

www.sars.gov.za

 

[zolly]

The most frustrating thing about this whole experience is she has lived with her parents for a number of years due to low earnings. Her parents never thought to ask her "Have you submitted your taxes this year?"

My mum trusts the hell out of me and knows I am financially stable and always sends me a quick reminder to pay.

 

[zolly]

Hi Zolly

Here is questionairre, that she must complete and it will determine if she has to submit a return:

Do you need to submit a return? | South African Revenue Service

Not sure whether you must submit an Income Tax Return (ITR12)? Answer these simple questions and find out. Top Tip: If you would like to make changes to any of your responses on the questionnaire, you need to refresh the page. Disclaimer: What is contained in this questionnaire is intended as...

www.sars.gov.za

Thanks man.

 

[rh1]

The last question is whether she earned above a certain amount. I click no;

 

[zolly]

The last question is whether she earned above a certain amount. I click no;

View attachment 1142592

Great man. I'll send her this as well.

 

[AchmatK]

If you receive only income from one employer for the full tax year (12 months) and you are under the threshold then no need to file.

The issue is that most people get some interest income which automatically mean that they must submit a tax return. If you have a medical aid then you must submit. If you contribute to an RA or tax free savings account then you must submit, irrespective if you are under the threshold. If you change jobs during the tax year then you must submit. There are very few people that qualified for no tax return submission based only on the income threshold.

 

[zolly]

If you receive only income from one employer for the full tax year (12 months) and you are under the threshold then no need to file.

The issue is that most people get some interest income which automatically mean that they must submit a tax return. If you have a medical aid then you must submit. If you contribute to an RA or tax free savings account then you must submit, irrespective if you are under the threshold. If you change jobs during the tax year then you must submit. There are very few people that qualified for no tax return submission based only on the income threshold.

Thanks. Was unaware of this. She has been paying medical aid. Not sure about any job changes.