TAX TALK: September 30 Tax Deadline Is Here

In this series of articles, Cameron Kotze the Tax Partner at Ernst and Young discusses some topical tax issues for our readers.

Time certainly has flown this year (like in any other year) and we are in the home straight of 2004. It certainly does not feel like seven months ago when I dealt with the completion of the various tax forms in a few articles.This article really serves as reminder for those individual taxpayers who conduct their own businesses, including farmers and companies and close corporations that the September 30 tax deadline is only nine days away.Here is your checklist to ensure there are no tears in the future.The date for filing your 2004 tax return with the Receiver of Revenue is September 30 2004.If you know you will not be able to file your return by this date, you should ask the Receiver of Revenue for extension of time to file the return.The maximum period of time that they will allow is a further five months – up to February 28 2005, a year after the tax year ends which is not unreasonable at all.Once you have arranged for extension of time to file your 2004 tax return, you should determine how much tax you have to pay by September 30.The last page of the 2004 tax return is a tear-off page that should be used to declare your taxable income and your payment should accompany this return (tax form 6-0/0012A).The tax return contains a tax table that indicates the rates to be used that should be applied to your taxable income to determine the amount of tax payable.You must deduct the total employees’ tax and provisional tax payable from the tax liability calculated to determine how much tax is owing for the 2004 tax year.If you have a refund owing to you in respect of any previous tax year, this amount cannot be used to reduce the amount payable for the 2004 tax year.Your calculation should obviously be as accurate as possible because any under payment will be subject to interest and any over payment will not attract any interest.This is not fair at all but then tax in it self is not always fair.Once you have calculated the amount of tax payable you should remember that the date for paying any tax owing to the Receiver of Revenue in respect of the tax year ending February 29 2004 is also September 30 2004.If you do not (or cannot) pay the tax owing by this date, the Receiver of Revenue will charge interest on the amount not paid by September 30.If you do not have the money to pay the tax owing, I suggest you ask your bank manager to assist you so that you are able to pay by September 30.The reason for this advice is simple – the Receiver of Revenue charges you interest at an effective rate of almost 22 per cent per year compared to the overdraft rate of 12,5 per cent.It therefore makes no sense to delay the payment that is owing to the Receiver of Revenue.In addition to this heavy interest rate, the blow of paying interest to the Receiver is further compounded by the fact that interest paid to the Receiver is not tax deductible.In short then, if do not have the money to pay your tax by September 30, borrow it and pay the Receiver his dues.As they say in the classics – there are two things in life that is certain.Firstly, you will die and secondly, you will have to pay tax.You can save yourself a lot of tears by paying the tax when it is due.Should readers have queries, they are invited to send them to cameron.kotze@za.ey.com.It certainly does not feel like seven months ago when I dealt with the completion of the various tax forms in a few articles.This article really serves as reminder for those individual taxpayers who conduct their own businesses, including farmers and companies and close corporations that the September 30 tax deadline is only nine days away.Here is your checklist to ensure there are no tears in the future.The date for filing your 2004 tax return with the Receiver of Revenue is September 30 2004.If you know you will not be able to file your return by this date, you should ask the Receiver of Revenue for extension of time to file the return. The maximum period of time that they will allow is a further five months – up to February 28 2005, a year after the tax year ends which is not unreasonable at all.Once you have arranged for extension of time to file your 2004 tax return, you should determine how much tax you have to pay by September 30.The last page of the 2004 tax return is a tear-off page that should be used to declare your taxable income and your payment should accompany this return (tax form 6-0/0012A). The tax return contains a tax table that indicates the rates to be used that should be applied to your taxable income to determine the amount of tax payable.You must deduct the total employees’ tax and provisional tax payable from the tax liability calculated to determine how much tax is owing for the 2004 tax year. If you have a refund owing to you in respect of any previous tax year, this amount cannot be used to reduce the amount payable for the 2004 tax year.Your calculation should obviously be as accurate as possible because any under payment will be subject to interest and any over payment will not attract any interest.This is not fair at all but then tax in it self is not always fair.Once you have calculated the amount of tax payable you should remember that the date for paying any tax owing to the Receiver of Revenue in respect of the tax year ending February 29 2004 is also September 30 2004.If you do not (or cannot) pay the tax owing by this date, the Receiver of Revenue will charge interest on the amount not paid by September 30.If you do not have the money to pay the tax owing, I suggest you ask your bank manager to assist you so that you are able to pay by September 30.The reason for this advice is simple – the Receiver of Revenue charges you interest at an effective rate of almost 22 per cent per year compared to the overdraft rate of 12,5 per cent.It therefore makes no sense to delay the payment that is owing to the Receiver of Revenue.In addition to this heavy interest rate, the blow of paying interest to the Receiver is further compounded by the fact that interest paid to the Receiver is not tax deductible.In short then, if do not have the money to pay your tax by September 30, borrow it and pay the Receiver his dues.As they say in the classics – there are two things in life that is certain.Firstly, you will die and secondly, you will have to pay tax.You can save yourself a lot of tears by paying the tax when it is due.Should readers have queries, they are invited to send them to cameron.kotze@za.ey.com.