As a Director of a Company, your salary is subject to monthly PAYE and UIF deductions. Many small business owners don’t realise that if they operate their business through a company (Pty), the company needs to be registered as an employer with SARS.
This means, the company needs to deduct employee’s tax (PAYE) from the amounts paid to Directors. It’s also required to make monthly EMP201 submissions (this is the PAYE, UIF and SDL return) to SARS. The same applies even in the case of “owner managed” businesses -where there’s only one director and no employees...
Nowadays, work culture has evolved massively. “Flexible employment” has become the new buzzword. A lot of workers choose to work from home (with their employer’s permission, of course) to avoid a loss of productivity during the daily commute into an office. Fortunately, SARS does allow these employees to deduct their home office expenses within the “Other Deductions” section of the ITR12. All this is allowed under certain specific conditions though.
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. ...
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.
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...
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 ...
What is a recurring penalty? OR What are recurring SARS penalties? OR What does it mean to receive a penalty? This is a penalty for non-submission of your returns in previous years. You need to see which returns you have not submitted and submit them ASAP. You also need to make payment to SARS for this penalty, but you would have to call them on 0800 00 7277 or log onto SARS eFiling to get a current statement of account and know exactly what they want from you.
What is the definition of tax threshold? Tax thresholds? SARS Threshold. A Tax threshold is the lower limit of earnings at which tax needs to start being paid. So any income less than the current threshold, would not be taxed.
What is Turnover Tax? Turnover Tax is a simplified tax system only available to sole proprietors, partnerships, companies or close corporations with a “qualifying turnover” of less than R1m per year. These types of entities are called micro businesses....
Should interest on your home loan be deducted from your rental income? Yes, it does, the interest would go under the finance costs, the actual bond repayments are not deductible for tax purposes.
Should my rent which is paid by my boss, reflect on my payslip? Yes, this would be fully taxable at the same rate as your salary. It can reflect as 'other allowances - taxable" and can reflect under source code 3713 on your IRP5.
Is there a VAT payment on maintenance expenses for my car? ...
What is a provisional tax? Provisional tax is paid by people who earn income other than a salary / traditional remuneration paid by an employer.
How do I convert from a provisional taxpayer to a regular taxpayer? OR How do I de-register as a Provisional Taxpayer? Your tax number stays the same, just make sure that it has not been deactivated. This has happened in some cases. You will also need to de-register as a Provisional Taxpayer (this won’t affect your tax number) You can do this on eFiling by going to the Home Tab and clicking Tax Types and de-registering there. This will mean you are only a "regular" taxpayer...
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. ...
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.
What is a rebate? A rebate is an amount by which SARS takes off the actual taxes owing to them. SARS will calculate the amount of tax that you owe to them, based on your income and expenses throughout the year, then if certain conditions apply, they’ll reduce the amount due.
What does a negative tax refund amount mean? This means SARS owes you money
What do I do if my refund was paid into the wrong bank account? ...
What is the meaning of an audit? What is an audit from SARS? SARS audit What is a SARS audit? Being audited just means that SARS could be doing a random selection and checking that all the information submitted is the same as they have.
How long does it take for SARS to pay me after an audit? OR Payment pending an audit, how long is that? OR Payment still pending due to audit. It can take anywhere from 24 hours to a few months. You will receive a letter of completion once the audit has been verified indicating if any changes have been made. You just have to sit tight and be patient....
Are donations to political parties’ tax deductible? They are deductible if the political party is a registered Public Benefit Organisation/Not-For-Profit and is registered with SARS.
Are church donations deductible? The church should give you a receipt with a PBO/NPO/NPC number, if they don't have a number then you cannot claim the deduction. The number needs to start with a 9. It should be either 9 or 10 digits.
Foreign gift in the form of donation OR Donation from overseas OR Informing SARS of inheritance OR Donations received from overseas...
What is an IRP5? An IRP5 is the employee's tax certificate that is issued to him/her at the end of each tax year detailing all employer/employee related incomes, deductions, and related taxes. The employee uses it specifically to complete his/her income tax return for a specific year.
Do I need an IRP5? Yes, you do if you were employed during the tax year.
Can I submit a return without an IRP5? OR Am I able to submit returns without my IRP5? OR Are you able to submit without the IRP5?...
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...
What constitutes wear and tear? What is depreciation? What is the depreciation limit? Wear and Tear or Depreciation is the decrease in value of an asset. SARS allows you to deduct this decrease each year based on the tables. See here for the latest Depreciation Calculator
Can I claim depreciation for my car as a sole proprietor if I have a log book by using the tax table? You would be able to depreciate your car over 5 years, but you need to then apportion it for the use of business travel based on the logbook...
Primary, secondary, and tertiary rebates – depending on your age. A rebate is a set amount that SARS whacks off your total tax liability and basically represents the amount excluded by the minimum threshold to pay tax.
Primary rebate is for those under 65 years of age (on the last day of the tax year), the secondary rebate applies to those between 65 and 75 years old, and the tertiary rebate is added for those over 75 years old...
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:
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!
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.
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.
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.