I do a lot of tax returns every year and this has to be one of the most common complaints I receive. Every year without fail I get clients who compare this year with last and then go to SARS only to be told the exact same result as I told them. So, I thought it would be a good idea to examine why this phenomenon occurs.
Firstly, why do we as citizens of South Africa get refunds from SARS at all? Well, to begin with let’s explain how your taxes are paid. Month to month your company’s payroll administrator does his best to estimate what taxes should be withheld from your payslip and paid over to SARS. He has to contend with quite a number of factors, most of which are entirely out of his control: will you leave, did you start in the middle of the tax year, will your affairs remain exactly the same for the rest of the year, how much did you drive your company car, how much was your medical aid contributions etc etc. It can be somewhat daunting to comply with the multitude of SARS guidelines and rules, which is why you should always consider using an experienced payroll admin such as Allen Payroll (shameless plug).
Seriously though, he does his best. But no matter what tax is paid over each month next to that dreaded label of PAYE, unless your tax affairs are super simple, it will seldom be exactly right.
Enter Tax Filing Season. During this period of time SARS asks you to tell them what actually happened in your tax life during the previous year. They know what your payroll admin told them, now they want to hear from you. If the payroll estimates each month during the year ended up being too low (oh no!) you will end up paying the difference in to SARS. If the estimates during this time were too high (yay!) then you will receive a refund. Don’t think of this as new money, it was your money, just paid over to SARS for safe keeping and you are now receiving it back.
So now that we understand where this money comes from let’s examine the reasons the payroll estimate might be too high resulting in a refund.
There are really a multitude of factors that determine whether you will receive a refund from SARS or not. The delicate play between these factors is where Tax Practitioners dance and help you make the most of them. It may seem like a daunting task but it’s really not. We have an innovation launching on the 3rd December that will help you out (or if you are from the future and looking back at this it will hopefully still be there for you too). A guided interactive form of simple YES/NO questions which will help you through this maze of legislation and documents, all from the comfort of your couch (or wherever you like to do your taxes). There really is no better time to ensure you are up to date.
So, in conclusion, whether you receive a refund this year or not, remember that we as practitioner’s have to play by the rules, it’s not up to us whether we feel like getting you one. We understand the rules very well and can help you use them all, but we can’t massage them for you. Always keep in mind the golden rule of refunds: you never receive back what you didn’t pay in the first place.
Author: Brandon Allen
I'm a business Accountant in practice. Nothing fancy about me, but occasionally I have a flash of inspiration you might find useful. My blood is also 50% coffee.
Note that no information in these posts constitutes official advise, please contact us with your specific needs.