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The low-down on Financial Statements for companies

Posted 20 April 2017

With the launch of the Corporate Income Tax Return service for SME’s recently, there are questions around the requirement for companies to produce financial statements once they have filed their return. In particular, small business owners have been asking whether they need to engage an expensive professional to prepare them, or if can they be drafted and signed internally by their accountant/bookkeeper. There also seems to exist some confusion around the requirement for an audit versus an internal review. Below, we try and clear up some of the confusion around this topic. ...

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Which dividends are exempt from Dividend Withholding Tax?

Posted 20 April 2017

 

There are certain dividends, which don’t attract dividends tax, provided some conditions are met. However, lets first take a step back and clarify what dividends tax is, and how it is calculated.

Dividends tax is a withholding tax, which is levied at 20% on dividend distributions. It is the obligation of the company paying the dividend to withhold the tax and pay it over to SARS. 

Depending on the nature or status of the dividend recipient (i.e. the party who receives the dividend) the dividend could be exempt from dividends tax.  However, it is up to the dividend recipient to complete the required forms and submit these to the company, which is distributing the dividend, prior to payment.

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Alert: Change to Provisional Taxpayer Rules

Posted 23 March 2017

Currently, there is a legal obligation for South African resident employers to register with SARS for employee’s tax (PAYE) so they can withhold tax on a monthly basis from their employees’ salaries, and pay this over to SARS. However, the situation is different for foreign companies who employ South African residents. If these companies don’t have an office or a branch or some other legal representation in South Africa, they don’t have an obligation to register with SARS for PAYE...

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Unpacking the Budget Speech: proposed changes to foreign employment

Posted 10 March 2017

Since the announcement of the 2017/2018 budget, TaxTim has been asked many times about the changes to the foreign employment income exemptions rules which could have a very negative effect on taxpayers working overseas.

Currently, if a South African resident works for a foreign employer and is out of the country for 183 days or more, within a 12 month period, and they fulfil various other conditions, their foreign employment income may be exempt from South African Income tax. Please read our blog on foreign employment income Foreign Employment Exemption for further clarification...

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Digging into the detail of Building Allowances

Posted 3 March 2017

The cement is all used up and the bricks have been laid exactly where they need to be. A huge sigh of relief because… finally, construction and renovations are complete! And, just when you thought the worry was over, you realise that the differences between the building allowance and renovations aren’t clear to you. “Aren’t they all the same?” is the question lingering in your head. Don't fret, below is a breakdown of the exact clarity you’re looking for.
...

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Special Economic Zones

Posted 3 March 2017

Special Economic Zones (SEZ’s) are certain designated areas of a country demarcated by the government for special targeted economic activities. These are generally areas where business and trade laws are different from that of the rest of the country. The aim of these zones is to encourage increased foreign investment and trade, as well as job creation. This done by way of several tax incentives which are available to business which operate in SEZ’s.

They include the following:...

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2017/2018 Budget - The rich are going to pay more, but what does that mean for the rest of us?

Posted 22 February 2017


Personal Tax Rates (rates below)

Individuals across the country, those qualifying above the new tax threshold of R75 750 (previously R75 000) will be paying increased taxes of R16.5bn (previously R5.65bn in actual tax increase) for the next tax year, most of this will be for high income earners, however. Taxpayers generally across the board will be earning the tiniest bit more money each year as their tax brackets have shifted outwards, but, due to high inflation these savings will still be affected up by increased prices and so the minister has hardly been kind to taxpayers here.

 

The HUGE change announced by the minister, this year, is the addition of a super bracket for the wealthiest individuals who are earning more than R1 500 000 per year...

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How to Make a Payment to SARS

Posted 21 November 2016

You have filed your tax return with SARS and they have responded with your ITA34 assessment. The bad news: you have to pay SARS some additional money. The ITA34 does not explain how to go about making payment.

Follow these quick steps below to get the payment details required to make your payment to SARS by EFT:

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The Dangers of DIY Tax: How to Avoid Disaster

Posted 17 November 2016

Have you ever started one of those ‘oh, this’ll be easy’ Do-It-Yourself jobs, only to find yourself utterly frustrated half-way through wondering - what was I thinking? Pieces of wood cut just a few millimetres short of what they should’ve been. Holes drilled in the wrong places. Screwdrivers in every size except the one you need, missing bolts or the wrong colour paint! These DIY disasters can land up costing you much more time and money to salvage (or in the worst-case scenario – start from scratch) than it would’ve if you’d hired a professional to do it for you from the get-go.

It’s a situation we see time and time again: Taxpayers who’ve used free, go-it-alone methods to do their tax return and who land up with their taxes in a mess. The main concern with this method is that there’s little in the way of guidance or prompting within the system, telling you exactly what you’re supposed to be filling out at each point, or what values you need to declare where. It’s exceptionally easy to make errors or omissions, and the scary part is that incorrect or incomplete tax returns can amount to penalties and administrative pain in the long run.

Did you know that SARS can penalise you with something called ‘unforced errors’? Legally, the onus is on you to have sufficient knowledge and understanding of the complex tax regulation and SARS guidelines to complete your taxes accurately. I’m not telling you this to create undue stress and panic. I’m telling you this because it happens – and it doesn’t need to!

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Tax Exemption for Foreign Employment Income : What You Need to Know

Posted 11 November 2016

Tax on Foreign Income

If you think earning an income from a global source isn’t taxable on home soil, I’m afraid I have some bad news. Whether you’re earning Dollars, Euros or Yen, as a South African, it’s more than likely you’ll have to pay tax on this income. This is because South Africa’s taxation system works on a residence-based tax system meaning we’re taxed on worldwide income.

There is, however, some good news!

Section 10 of the Income Tax Act offers a list of conditions where income earned (or at least a portion of it) for services rendered outside of South Africa borders will be exempt from income tax.

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6 Reasons Accounting Records Are Critical to Your Small Business

Posted 18 October 2016

You’re an entrepreneur. A wildly innovative individual. An ideas person. A make-things-happen person. A real go-getter. Passionate about your business and pursuing your dreams. And brilliant at keeping your accounting records up to date. Chances are that last one doesn’t ring true, does it? Don’t feel alone, financial record-keeping is the bane of existence for most small business owners and managers. 

When you’re in the throes of building your empire from the ground up, you’re often so busy working ‘in the business’ that there’s little time to work ‘on the business’. As a result, accounting records are often the last thing on your mind. So long as there’s money coming in and your bank manager doesn’t have you on speed dial for the wrong reasons, you’re happy to keep going, right? 

But here’s the thing. Accurate records of Revenue and Expenses – even in the most basic form – are vitally important and shouldn’t be one of those tasks relegated to the ‘when I have time’ folder. They contain - or should contain -  the information to help you to make informed financial decisions and provide you with insight into areas of potential problems.

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Special Stopper at SARS: What We Know For Sure

Posted 22 September 2016

Over the last few weeks, our helpdesk has received an alarming number of queries from taxpayers asking what they can do as their refunds are being held back by SARS due to a special stopper being placed on their account. It’s a complex situation and the only advice we've been able to provide has been for the individual to make contact with SARS directly to try resolve the matter.

The South African Institute of Tax Professionals (SAIT) issued a statement on Tuesday 20 September 2016 advising that they’re looking into the issue after numerous complaints had been raised. The complaints are coming from not only individual taxpayers, but from tax practitioners and their controlling bodies too.

Initial investigations reveal that the primary reason for Special Stoppers being applied is because the personal details of the taxpayer haven’t been verified on the SARS system. Most often these are physical address or bank account details.

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Promised a Guaranteed Tax Refund? Be Afraid - Be Very Afraid

Posted 16 September 2016

Guarantees are pretty powerful – they’re used by leading manufacturers and retailers to gain our confidence and trust. We’ve all come across them at some point or another: “Life time guarantee”, “money back guarantee”, “product satisfaction guaranteed, or your money back”. They’re a promise. A promise that your purchase will provide you with a level of value, or a return on your investment. While a guarantee is common – expected, even – for certain products or services – one that should never be made is for a tax refund. And yet this happens. And every year unsuspecting taxpayers fall into the trap of unscrupulous people who claim they’ll guarantee you a tax refund if they do your tax return.

“But, what’s wrong with it?” you may be wondering. “Why can’t they make a promise like that?”

Simply – it’s just not true.

A tax refund isn’t a given. It only happens when a taxpayer has paid too much tax for the year. And the only way for that to happen is if your deductible expenses and tax credits reduce your tax liability below what you’ve already paid.

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10 Ways to Spend Your Tax Refund

Posted 8 September 2016

It’s tax season, and one of the most compelling reasons to file a tax return (besides the fact that it’s the law, of course) is the chance that you’ve overpaid the taxman and that you’ll hear that sweet SMS sound of funds deposited into your bank account from SARS. Of course the best part about a tax refund is that it’s likely you hadn’t budgeted on the extra cash, and so you’re able to spend it as you please. Whether you choose to do so sensibly or splurge a little, we’ve rounded up some ideas on how to spend or invest your tax refund.

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How Long? Typical Waiting Periods from SARS

Posted 22 August 2016

Patience is a virtue, so the adage goes. And when it comes to waiting for responses from most government departments, they can certainly put your skills of tolerance to the test. Our helpdesk is inundated with questions about how long SARS will take to react or respond to certain requests or submissions. The short answer is ‘typically, quite a while’. You can imagine that during their busy filing season there are hundreds of thousands of documents being processed and not all administration can be automated. To ensure that taxpayers are adequately prepared for how long they can expect to wait for SARS to act on a particular task, we’ve rounded up their guidelines on waiting periods.

Let’s get right to it, shall we?

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7 Types of Tax Directives

Posted 19 August 2016



Imagine you’re an estate agent or luxury car salesman. Chances are that you don’t earn much (if anything) as a basic salary and you rely on a few big deals and commission payments to keep you afloat during quieter months.

Or imagine the company where you’ve been employed for almost 12 years is in trouble and you’ve been offered a retrenchment package, meaning you’ll receive a rather substantial severance amount on your last day. Or perhaps you’ve decided to leave South African shores for good and you’re cashing in your sizable retirement annuity fund to pay for your relocation.

In any of these situations, the money you receive is taxable. But as substantially larger or abnormal amounts compared to your normal pay cheques, you may find yourself paying over too much tax if charged at the standard income tax rates. This is because the standard income tax rates are calculated by adding the presented amount to any other income you may earn and then aggregated out to an annual amount. In other words, it’s assumed that this amount will be the amount you’ll earn each month for the tax year, which isn’t the case. In these instances, and a select few others, it’s worthwhile to consider applying for a tax directive from SARS.

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When Will SARS Pay My Tax Refund?

Posted 12 July 2016

Now that the 2016 tax season is open and hundreds of thousands of South Africans are filing their annual tax returns, every day people ask us “when will I get my refund from SARS?”.

While we’re not involved in the payments of tax refunds, we can provide a little insight into the SARS processes and timelines. So here goes …

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5 Reasons you Still Need to File your Tax Return in 2016

Posted 30 June 2016

SARS has recently communicated that if you earn less than R350,000 in a year, and fulfil a series of complicated criteria, you may not have to file a tax return in 2016.

However, we advise you to take GREAT CARE here, and understand your duties properly, because if you don't, you may suffer for it later on.

Here are the top 5 reasons why not to skip filing your tax return this season:

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Do You Need to Ring-Fence Your Business or Rental Losses for Tax?

Posted 29 June 2016

When pursuing a business activity, trade or renting out a property, you’re no doubt doing so to make some money, but the reality for self-starters is that there’s a good chance it’s going to take some time for your venture to break even, which can often mean facing a loss.

Your additional income is of interest to SARS as it translates into more tax revenue for them, so how do you record your loss to them? And when, how and where is the loss applied from a tax perspective?

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Tax Free Savings Accounts: Everything You Need to Know

Posted 21 June 2016

As a nation, South Africa does rather poorly on the savings front. With the majority living near or below the breadline, there’s not much to save when you’re more concerned with just getting through the month. Our high levels of consumer-debt, combined with little in the way of personal savings, means we become financial burdens on the government in the long-run. It’s for this reason that tax free savings accounts were introduced in March 2015 as an incentive to encourage household savings.

Since then, financial houses have created quite a buzz around these savings accounts, promoting them through radio, television and online advertising as an accessible savings mechanism. And since they offer a ‘tax break’, this year you’ll see them referenced on your annual tax return (ITR12). So let's have a closer look at these accounts and what they mean to you, as a taxpayer.

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Food for Thought on Subsistence Allowances

Posted 13 June 2016

You’ve been up since 4am in order to catch yet another red-eye flight for a 9am business meeting - 1,400km away - and you’re already onto your third coffee by the time you board the plane. While you’re fairly accustomed to the frequent business trips requiring out of town travel, you’re still somewhat confused by the tax implications of the subsistence allowance your employer gives you for your accommodation and meals for these work trips.

Never fear jetsetter, let’s have a look at the subsistence allowance structures and the tax regulations around them.

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Who's (Legally) Allowed to File Your Tax Return?

Posted 6 June 2016

Tax isn’t the easiest of subjects to navigate. Besides the long list of legalese to master, there’s the fact that tax legislation evolves year on year. What was applicable on your tax return 2 or 3 years ago, isn’t necessarily valid on your next, and what’s right this year, may change next season.

It’s unsurprising then, that when faced with the daunting task of filing their annual tax return, many people turn to a friend, colleague or trusted broker to help them out, in the hope that they’re more proficient. And while it may be safe to do so for advice on, say, an alternative medical aid option or a good restaurant for a good dinner, when it comes to tax, this can have serious legal consequences (for both parties) if things go wrong.

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9 Steps to File an Objection to Your Tax Assessment

Posted 1 June 2016



You’ve been diligent with your tax obligations. You’ve paid your PAYE each month without fail. You’ve kept all the supporting documents for your deduction claims. You’ve carefully filled out your tax return, making sure you’ve put all the right amounts in all the right places, against all the right codes. (Pssst, if you used TaxTim to help you complete your tax return you wouldn’t have had to worry about all the right places and codes that’s all automated for you!) You file your tax return, somewhat impressed with yourself and, by your calculations, you can look forward to a reasonable tax refund amount. Then you get your assessment notification.

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Sole Proprietor or Company: What's Best for Tax?

Posted 31 May 2016

Getting a new business venture off the ground is an equally exciting and stressful time. You’re enthusiastic about getting your new product or service out into the market, but you face quite an administrative process to get it off the ground legally.

A decision that often stumps many small business owners is whether to operate as a sole proprietor or as private company, a PTY Ltd. We receive many questions about this from entrepreneurs wanting to know the tax implications of each route.

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5 Great Reasons to File Your Tax Return Early This Year

Posted 24 May 2016

Are you the type of person dashing into the store to grab a birthday gift en route to a party? Or perhaps you’ve found yourself scratching through your craft box at 11pm the night before to make a ‘World Book Day’ outfit for your son? Or possibly you’re one of the hundreds of thousands of South Africans who waits until the last week of November to file your tax return?

While I’m not suggesting that every minute of your life needs to be pre-planned and organised, there are certainly a number of benefits to getting your tax done early. Here are a few motivations for you to get it over and done with when tax season opens on 1 July.

Read more →

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Let TaxTim
help you
submit your
Tax returns!


TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund

Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

Get started