Filing tax in 2021: what you need to know
Filing tax for the 2021 year of assessment will have an added layer of complexity taking into account lockdown-related retrenchments, TERS pay-outs and the rise of the gig economy as a result of the 2020 lockdown. Here’s a breakdown of what you need to know to file tax during 2021.
Filing tax if you’re working from home
If you worked from home for at least six months during the 2021 tax year, you can claim for your home office expenses. “If you qualify to claim the deduction, you may claim ‘pro-rated deductions’ based on rent, interest on your mortgage bond, rates and taxes and cleaning,” says Nicci Courtney-Clarke, COO and head of Tax at TaxTim. “You may also claim wear and tear on office equipment and repairs to the office.”
Filing tax if you’ve lost your income
If you were retrenched during the 2021 tax year, you still need to file a tax return. If you don’t, you could miss out on some benefits. “If you have been retrenched, there’s even more of a reason to file because it is likely that you have overpaid tax for the year and will be due a refund,” says Courtney-Clarke.
Don’t make these mistakes if you’ve been retrenched.
Why would I be owed a refund?
If your employer/s deducted PAYE (your income tax deduction) for any contract or permanent employment during the 2021 tax year, this would’ve been calculated based on your annual income. This is because your monthly salary is grossed up to 12 months, and tax tables are based on these annualised earnings. If you didn’t work for the full 12 months of the tax year, you would’ve overpaid income tax, and therefore are owed a refund.
How do I ensure I get my refund?
It’s important to declare the periods you were unemployed on your tax return to ensure you get your refund. Submit all IRP5s you’ve received from your employer/s, even if you worked for a period as short as one month.
If you received a TERS or UIF benefit pay-out, neither of these amounts should be taxed.
Filing tax if you’ve had a pay cut
Even if you’ve had a pay cut, you should still file your tax return. The only exception is if you are under 65 years of age and earned less than R83 100 in the 2021 tax year. “This would put you below the tax threshold, which means you won’t pay tax on your earnings,” says Courtney-Clarke.
Filing tax if your work looks different now
The lockdown gave rise to the gig economy, and many workers globally have taken on freelance jobs or temporary and contract work to make ends meet in the challenging job market. So, what do these mean for your tax return in 2021? “You can claim any expenses you incurred to earn a freelance income,” says Courtney-Clarke. “This would include travel costs and business phone calls. All travel costs must be supported by a detailed logbook in which business and private mileage must be recorded.”
Remember to collect and safely store the following proofs of purchase/expenses to support your tax return expense claims:
• Travel-related invoices and receipts (these would include fuel, maintenance, insurance etc.)
• Cell phone invoices/receipts. “Only the business portion of the bill can be claimed,” says Courtney-Clarke.
You would need to claim these expenses in the Local Business section of your annual tax return. “This is the same place in which you would declare your freelance/additional income,” explains Courtney-Clarke. “You can only claim expenses relating specifically to your freelance work and not your normal salary too.” Use this income tax calculator to work out the tax deductions you will pay for the current tax year.
If you’re in between jobs, or your income has changed as a result of a pay cut or retrenchment, meeting with a qualified financial planner can offer you peace of mind for your financial outlook. Book a meeting with one today.
As a Reality Club, Core, Plus or Health member, you have free access to TaxTim, an easy online tool valued at up to R599 that takes the work out of filing your tax by doing it for you.
Want to learn more?
We send out regular emails packed with useful advice, ideas and tips on everything from saving and investing to budgeting and tax. If you're a Sanlam Reality member and not receiving these emails, update your contact details now.Update Now