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Must a person who only receives income below the tax threshold be registered for income tax?

26 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Kindly advise whether the following person should be registered for tax purposes:

I have a trust which awards net interest below the tax threshold to a person in his twenties.    However, he has been diagnosed as schizophrenic. He is in sheltered care and is not employed and probably will never be able to earn his own income.

The new trust tax returns require the tax reference number of beneficiaries or may I insert the identity number of the above person.

Please also advise whether minor children receiving awards below the tax threshold if they need to be registered.

A: You are correct that a person must only register for normal tax if that person is "a person chargeable to tax” (according to section 151 of the Tax Administration Act).  Normal tax can only be levied on taxable income and the rebates are then deducted from the tax so calculated.  The tax threshold is relevant for provisional tax purposes only.  

The obligation to submit returns arises in terms of the annual notice.  A natural person is obliged to furnish a return if that person carries on a trade other than as an employee.  It then "exempts” a natural person from furnishing a return if the gross income of that person is less than the tax threshold or that person’s remuneration was less than R250 000 (not applicable).  

The issue of having to enter a tax registration number on the tax return for a trust was taken up with SARS.  We don’t know if it will be a compulsory field for the 2015 return and can’t comment on whether the identity number will suffice.  It is not a compulsory field for the 2014 one and you can leave the detail out.  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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