It's Tax Season Again!

It's tax season again and while many will hear happy news, a few are in for a shock. We often hear stories about people getting many thousands back in returns. If you earn a taxable income which is above the tax threshold and you are a registered tax payer you should file your annual tax returns. So this tax season when filing your returns consider your three possible outcomes:

1. You might get money back
2. You might need to pay in to SARS
3. You possibly could receive nothing and wouldn’t have to pay in a cent
No matter the outcome of your tax returns you need to always be mentally and financially prepared. One might need to pay money to SARS because your taxes for the previous year might have been under-calculated. An emergency fund would be very helpful here because otherwise people often need to use credit to pay the Revenue Service.
If one is so fortunate as to be getting money back from SARS it is important to remember that this is not free money. It is money that you have already worked for that you are now getting back. Tax returns should serve you in the long run financially rather than short term. It is important that you either save this money or use it very wisely to alleviate some of the pressure from debt rather than spending the money faster than it came in.
A few important things to remember:

  • File your tax returns on time and avoid possible penalties 
  • Make accurate claims and be very honest
  • Make sure to verify your details, you’ll avoid a lot of stress in the future
  • Make sure you get your IRP5 and/or IT3(a) form/s from employers and have all relevant documents when filing
  • This time of year many emails are flying around that are supposedly from SARS. Be very careful about scams and disclosing your information to criminals
  • Most importantly Ask for Help not all of us are tax consultants so ask for help, where you are unsure. Rather have your taxes done right it will save you heart ache and money

Make sure to do your returns as soon as possible, last minute procedures don’t work and can be troublesome. Your knowledge is power, if you don’t have the knowledge, acquire it and get the necessary help in order to make sure you’re on the right side of the ‘tax man’.

July is National Savings Month

The South African Savings Institute has declared July as National Savings Month. Saving should be an essential part of all our finances but for most of us it isn’t.
Currently only 44% of South Africans have formal long term savings, that is: less than half of our population. The debt-to-income ratio is now reported as being 78.4 %. That means that not only are people not saving, but also that for most South Africans large portions of their salaries go towards paying back debt.
The stats are shocking and it brings a realisation that most people are really financially unaware.
It is important to save for the following reasons:

  • Emergency fund: Life happens and if you should find yourself in a situation where you burst two tyres or you are temporarily out of work, you can pull money from this emergency fund which I like to refer to as a safety net. Often people go into debt to pay for emergencies and this becomes a burden long after the emergency has come and gone.
  • Creating financial Independence: If one has money saved, credit can be avoided when larger purchases are made. With effective saving one could for instance pay the deposit for a car and therefore reduce the financing term.
  • Short, medium and long term goals: We all have dreams and aspirations and things we would like to achieve. Sit down and do some introspection as to what you would like to save for in the short, medium and long term.

If I gave you a million rand would you be happy?

Or 10 or even a 100 million rand?

If I said you’d have to lose everything and everyone in order to get tons money, would you be happy after getting it? For most if not all of us the answer would be a resounding “No!!”

We are constantly bombarded with this idea that money and accumulation of vast wealth beyond what we know what do to with is what life is about. We are in fact wired to be very money hungry at times going through extreme lengths for money that we feel would make us happy.
We are given the idea that money equals happiness. On one hand we see some of the wealthiest of people, who spend lavishly but suffer from mental illness and resort to substance abuse just to get through.

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