?? How much will it cost you if you miss the deadline to pay your taxes? ??
The deadline for 2019’s tax season is the 4th December, just less than a month away, so it’s time to seriously focus on your tax returns.
South Africa is facing a dire tax collection crisis with implications for every South African if this does not improve. Since April 2014, SARS hasn’t met National Treasury’s tax collection target.
Experts forecast that at the end of March 2020, SARS will miss a tax collection of up to R60 billion, the largest collection shortfall to date. This would take the total tax collection missed over the past six years to a whopping R215 billion.
SARS needs to ensure that the budget deficit is reasonable and for the country to function optimally, SARS needs to ensure that enough revenue is generated through tax collection.
At the end of August 2019, figures from SARS showed that the agency has only managed to collect 39% of the target and for the 2019/2020 tax year, the agency has only managed to collect 37%.
Even though the South African government had opted for a VAT increase of 1%, the forecast larger budget deficit is more likely to result in a credit rating downgrade.
?? But what does it mean for ME if SARS doesn’t meet the tax collection target? ??
??1. Increased taxes for everyone.
If SARS doesn’t collect the money that the country needs, you may be asked to pay more tax because the government has to plug the deficit. Personal income tax and VAT increases are ways for the government to recuperate the money that has not been collected by SARS. Instead of only impacting those who default on paying their taxes, everyone is affected.
??2. Weakened rand.
An increased budget deficit and the weakened economy will result in a weaker Rand which means food will become more expensive along with fuel and consumer goods. Other products that are dependent on imports and global pricing will become more expensive too. For instance, South Africa relies heavily on the importing of wheat, which means that products like bread, pasta, cereal and processed meat and others will most likely increase in cost too.
??3. Electricity price hikes.
As Eskom relies on diesel to keep the lights on during dreaded load shedding, this becomes more expensive every time the rand takes a dip. For Eskom to keep up with the cost of diesel, the most effective way to recover the loss is to increase the cost of electricity. In the event of a ratings downgrade, this could result in larger interest payments on the large Eskom debt. This could mean larger electricity price increases or even the need for the government to provide another bailout to Eskom. This could also lead to tax increases to pay for this.
??4. SARS is clamping down on non-compliance this year. If you fail to submit a tax return.
SARS can charge an administrative penalty which can range from R250 to R16 000 per month or R3 000 to R192 000 per year.
Besides the penalty, you can also expect SARS to add interest to outstanding tax debt. This means that instead of paying the amount due to SARS, you’ll be spending more just because you haven’t paid.
SARS is also able to legally deduct money due directly from your bank account. So instead of waking up one day to a mysterious deduction that you need to dispute or enquire about, simply pay your taxes, on time.
?? Where do I begin???
While nearly everyone could benefit from working with a professional tax practitioner, the cost is often prohibitive. There comes a time, however, when paying for advice becomes a solid investment in your future.
If you are having trouble filing your taxes, or if you’ve never filed before, it’s best to get help from a professional.
For help completing your tax returns email me on [email protected]