Who is coughing up what?

When it comes to South African income tax, many blindly hand over their responsibility to a professional tax practitioner and glaze over headlines pertaining to how much the country collects annually.

It’s okay, we do the same. But let’s pull up our socks for a mere five minutes and take a look at who pays what.

Thanks to Des Kruger and Wesley Grimm of law firm Webber Wentzel, we have a break down of the National Treasury and SARS’ 10th annual edition of the tax statistics for South Africa, released in December, reports Business Tech.

Analysing the data – which includes key trends in tax revenue collections and highlights the role the tax system plays in contributing to South Africa’s fiscal health and socio-economic development – the duo noted a few things:

One of the biggest concerns in 2016/2017 came from Personal income tax (PIT), which grew 9.4% for the 2016/2017 fiscal year – a noticeably slower rate than in previous years.

At over 37%, personal income tax remains the largest contributor to fiscal revenue and often has a direct impact on the economy, as increased individual tax rates may act as a disincentive for economic activity, savings and investment, SARS said.

In focusing on personal income tax, in March 2017, there were 20 million individuals registered for income tax, a 4.7% increase from March 2016. The increase is attributed to the requirement that employers must register all employees as taxpayers, regardless of their tax liability, Weber Wentzel said.

Bearing in mind that an individual earning less than R350,000 a year from a single employer, with no other sources of income and no deductions need not submit a tax return, only 6,367,627 individuals were required to submit tax returns for the 2016 tax year.

Of this number, 4,800,344 returns were submitted and assessed. Those taxpayers who submitted returns had an aggregate taxable income of over R1.4 trillion and a related tax liability just short of R297 billion, with an average tax liability of R61,862 per individual.

So, this means that a large potential tax liability might still be outstanding – and there are other pitfalls:

• increasing personal income tax rates in economically uncertain and depressed times will not, necessarily, result in increased tax collection rates, and;
• there is a pressing need to address personal income tax non-compliance rates.

Eish – so what does that mean for this year’s tax season? Well, seeing as the economy isn’t necessarily improving, top personal income brackets aren’t producing as much revenue as expected.

So, we might be in a little more kak than originally thought.

Seeing as it’s the year to sort out your finances, partnering up with a reputable tax practitioner is probably a good idea.

Take the professionals over at Galbraith | Rushby for example. The firm, based in Woodstock, grew organically through word of mouth by maintaining high standards, personal service and that professional touch their clients have come to know.

From auditing and tax Advisory and Compliance, to accounting and bookkeeping, secretarial, payroll, they keep their clients as their number one priority, building long standing relationships by doing it right.

Adulting for the win.

[source:businesstech]