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2022 TAX SEASON:
WHAT TO CONSIDER
As a Sanlam Private Wealth client, you have access to a comprehensive range of fiduciary and tax services, including local and offshore investment structuring, global estate planning, and tax administration and compliance. With tax filing season just around the corner, it’s time to start getting your paperwork in order – what should you and your tax practitioner consider before you submit your 2022 income tax return?
Depending on your individual financial situation, the process of completing your annual tax return may be a complicated one. It’s therefore advisable to obtain professional assistance to ensure you’ve covered all the bases and prepared your return correctly. We’ve put together a handy checklist of questions to discuss with your tax practitioner.
By when should I file my tax return?
The tax return filing season is relatively short this year. For non-provisional taxpayers, it opens on 1 July 2022 and effectively ends on 24 October 2022. Provisional taxpayers (including many high net worth individuals) may file returns from 1 July 2022 to 23 January 2023.
When must the first provisional tax for the 2023 tax period be paid?
The first provisional tax payment in respect of 2023 is due on 31 August 2022. Your tax practitioner will contact you regarding the information required and will calculate the taxes due for the year ahead. A submission will be done on your behalf and payment made where necessary.
Why is it important to update my details with SARS?
If the South African Revenue Service (SARS) doesn’t have your latest contact, address or banking details – either as an individual or as the registered representative of a trust – you may not be able to access your e-filing profile or receive refund payments which may be due to you.
What are the tax implications of donations, as well as medical expenses?
These are important factors to discuss with your tax practitioner – they can have a significant impact on your tax liability. Many taxpayers are not familiar with the process of donating to Section 18A-approved organisations, which could potentially entitle you to an income tax deduction of up to 10% of your taxable income in a given assessment year.
Your tax practitioner may also request evidence of medical expenses paid out of pocket during the year of assessment, in addition to your monthly medical aid contributions.
Is my wealth structured and invested in the most tax-optimal way – one that doesn’t compromise my investment objectives?
This is a conversation you need to have with both your portfolio manager and the expert fiduciary and tax team at Sanlam Private Wealth in order to determine the most tax-effective way of structuring your local and offshore investments. Read more about this here.
What about taxes such as estate duty?
It’s important to draw up a comprehensive estate plan with a fiduciary specialist – encompassing both your local and offshore assets and taking into account taxes and duties to be paid both in South Africa and in other countries. This will ensure that the proceeds of your estate are distributed to your loved ones as efficiently and in the most cost-effective way possible. Read more about estate planning and securing your legacy here.
What happens if I am emigrating from South Africa and wish to cease tax residency with SARS?
If you have decided to cease tax residency in South Africa, it is crucial to inform SARS of your decision in writing. The date of cessation will also have to be included on your latest tax return submission, and all e-filing details updated, since the e-filing profile is the mechanism used to apply for your tax emigration clearance (TEC). Again, ceasing tax residency can be a complex process – our team can assist you in formalising this with SARS.
What happens if I left South Africa a long time ago with no intention of returning, but did not inform SARS of my cessation of tax residency?
You will have to obtain notification from SARS of the date of your cessation of tax residency as soon as possible to ensure compliance with SARS regulations. There may be complications if you left South Africa without paying the exit taxes due at that time – please contact one of our expert team members for advice and assistance.
What are the possible consequences of non-compliance by taxpayers?
SARS can impose severe penalties for non-compliance with tax obligations under South African tax laws. Non-compliance can include non-submission or late submission of income tax returns, submission of incomplete returns, or non-disclosure of income. In terms of the Tax Administration Act, SARS can impose penalties of up to 200% for understatement of income. It is crucial that all income, from both local and foreign sources, be fully disclosed to avoid such penalties.
Tax compliance plays a major role should you wish to apply for a foreign investment allowance or a tax clearance certificate. If you have outstanding income tax returns or if there is any money outstanding on your tax profile, SARS will not issue such clearance.
Before you meet your tax practitioner, here are the most important documents and/or information you’ll need to have on hand in order to complete your 2022 return:
For an annual fee, our tax compliance team will provide an end-to-end, all-inclusive tax administration and compliance service for individuals, deceased estates and trusts. If you need any assistance in this regard, please don’t hesitate to contact Rene Klein on +27 (0)11 778 6662 or +27 (0)71 863 5202, or at email@example.com.
The formation and registration of trusts, and the provision of independent trusteeships – both local and oﬀshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Expert advice is crucial in dealing with cross-border estate and tax planning.
Stanley Broun has spent 10 years in Fiduciary And Tax.
Have a question for Stanley?
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Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.