What is income tax?
This is money that is collected from the earnings of working citizens and paid to the government.
The money is used to pay for roads, schools and various other government services.
The money is collected in the form of PAYE when an individual has an employer. For temporary or freelance workers, provisional tax must be paid by the individual.
In South Africa, the South African Revenue Services (SARS) manages the collection and processing of taxes.
In terms of income tax, individuals are required to submit an Income Tax Return. If SARS determines that you’ve paid too much tax, then you will receive a refund. If you’ve paid too little, then you’ll be liable for the outstanding amount. There are various tax professionals who can help.
Registered with SARS, these professionals are skilled to guide individuals in terms of the taxation process. Enlisting assistance from these professionals ensures that individuals avoid making some costly mistakes, which could result in penalties.
How much you must pay will depend on your age and the level of your earnings. These factors are the basis of income tax calculations. Even though paying taxes is not fun, the reality is that paying goes a long way towards contributing towards improving the lives of the citizens of a country.
Tax evasion has severe legal implications, so it’s important to declare income annually.
Without an income tax, a country significantly reduces its ability to function effectively, which is why the function of SARS is important. In an ideal world every individual would strive towards good citizenship, by ensuring that they remain fully responsible for income tax. But this isn’t the world in which we live, which is why tax regulatory bodies have to exist.