What is income tax?
Income tax is a tax levied on all income and profit received by a taxpayer (which includes individuals, companies and trusts). It is the national government’s main source of income and is imposed by the Income Tax Act No. 58 of 1962.
The form of tax that people generally associate with the concept of income tax is "normal" income tax. But the Income Tax Act is also the source of a number of other taxes that, although they have their own particular names, still form part of the income tax system. A few examples of taxes which may affect taxpayers are capital gains tax and donations tax. The Act also establishes a few methods of paying income tax - namely SITE, PAYE and provisional tax.
The form of tax that people generally associate with the concept of income tax is "normal" income tax. But the Income Tax Act is also the source of a number of other taxes that, although they have their own particular names, still form part of the income tax system. A few examples of taxes which may affect taxpayers are capital gains tax and donations tax. The Act also establishes a few methods of paying income tax - namely SITE, PAYE and provisional tax.
How is income tax collected?
The year of assessment
The year of assessment for taxpayers covers a period of 12 months. For individuals and trusts, the commencement date of the year of assessment starts on 1 March and ends on the 28/29 February each year. For Companies and Close Corporations the year of assessment is the applicable financial year.
Income tax returns are available annually after the end of each year of assessment to registered taxpayers, and must be completed and submitted to SARS each year.
The “Tax Season” commences 1 July each year, and the deadlines for the submission of returns are:
- Individual (ITR12) and Trust (IT12TR) returns (non-provisional taxpayers): Last working day of September for postal submission (the paper version) that can be posted or submitted at your local SARS branch in the designated drop box; or
- The last working day in November for eFiling via your PC or laptop or done electronically by a SARS consultant at a SARS branch. Please note that for the 2009/2010 year of assessment, SARS has announced the 26th November 2010 as the deadline for electronic submissions of Income Tax Returns.
- Individual (ITR12) and Trust (IT12TR) returns (provisional taxpayers): Provisional taxpayers have until the 31 January 2011 to submit their completed ITR12 income return to SARS.
- Company/CC (IT14) returns: Must be completed and submitted within 12 months after the financial year end of the company/close corporation.
The assessment by SARS
From the information furnished in the income tax return, SARS will issue an assessment showing either tax due or refundable, if applicable.
For more on income tax procedure see: registering; directives; extensions; returns; assessments; objections; appeals; alternative dispute resolution; paying SARS; and interest, penalties and fines, available under All Publications or our latest Tax Season 2010 page.
For more on income tax procedure see: registering; directives; extensions; returns; assessments; objections; appeals; alternative dispute resolution; paying SARS; and interest, penalties and fines, available under All Publications or our latest Tax Season 2010 page.
A look at the dreaded income tax, how it works, and to file. This article looks at income taxes mainly from the perspective of the individual taxpayer. Thank you, thats very interesting information. I need to share with my friends..Income Tax Services
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