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The IT77 Tax registration says I must provide 3 years income details, but I don't have this information. What to do?

I have been working for myself, all I can really do is look at past bank statements.

Do you HAVE to provide three years' info?

Add up your income on your most recent year's bank statements, and for earlier years give an estimate. The correct amount will be submitted to SARS when you complete the tax forms. You get taxed on your profit made i.e Income less expenses, so it will all work out in the end.

Thanks. When I go and register for tax now (for the first time). Are SARS likely to work out tax for 3 years? And expect me to pay that? Or do you think they are more likely to work out what I should have paid over the last 12 months?

Hi

If this is your first year of having to register and submit a tax return. Just put your current gross salary for the year in the form.

Your start date will be 01032010 and then closing date 28022011 and the salary will be what you will get gross for this year then.

I just put a note on the last page then saying that this is your first year and you do not have an IRP5 or you can just attach a payslip.

Well - I have been making money for 3 years or so. I should have registered for tax two and a half or 3 years ago.

I hope that clears up my situation. If SARS go and look at my bank records they will see money coming in starting in mid 2007

When calculating your income ensure you keep a track of your expenses as well, if your income exceeds R 57 000 per annum you will need to claim expenses otherwise you will be liable for tax. If you estimate your nett profit will exceed R 57K then start making some provisions to pay tax.
Attached are the annual tax tables to help you make that provision.

Make some enquires about registering a business formally. I assume you are trading as a sole prop, laws are changing is SA to move more towards formalising businesses and this will mean sole props will eventually fall away.

Xumilsa1 wrote:
Yes I am now aware of the thresholds.


I don't see them attached.

Well the issue is that I have not registered any business and I did not register myself for tax. I know this is very irresponsible - it was not without reason though; I had some very tough circumstances to deal with.

Like I said, I have been making money for about 2 and a half years.

I am now wanting to formalise everything.

Firstly, SARS don't look in your bank account. They will ask you to submit the last three years Tax Returns. If you have been self-employed for the last three years and have slips or invoices of expenses, these expenses can be claimed against your income. If your gross income for the year does not exceed 14 million (2006: 6 million), and you are not a shareholder or member of another company, then you are considered a small business corporation. For tax year ending February 2010, if your profit is below R54 200.00 you don't pay any tax. So, if you have been trading since 2007, rather complete the last three years returns to be on the safe side.

Ok - I thought that SARS had access to your bank account. As they ask for your bank details on the IT77.

3 Years - that's going to be a lot of tax to pay over to them. How are they with making arrangements to pay X amount per month for arrear taxes owed? Defintaley not going to have the cash to fork out 3 years worth of taxes.

Would I definately have to pay up everything over the last 3 years? Someone gave me the impression that if you come forward and register you only pay tax for one year (1 year in arrears)

The amount of tax due is dependent on how much profit you made. I've been doing tax for a number of small businesses like yourself, and after all their expenses have been deducted, their profit is either too low to pay tax or the books show a loss. Do you think you've made so much profit that there will be tax due?

If you find that there is tax due, you can make an arrangement with SARS to pay it off.

Once you've registered for tax, you automatically become a provisional tax payer, meaning that twice a year you estimate your profit made and if there's a profit, you pay a provisional amount to SARS in advance. Once your tax is assessed, your tax credits (provisional payments to SARS) gets deducted from what is due, and the difference is either payable to SARS or refundable to you.

Hope this helps!