Latest Posts in TaxTim's Blog

Alert: file by 24 November or face heavy fines and potential legal action!




SARS has recently announced that it will be clamping down on taxpayers who miss the deadline to submit their tax return. Besides stating that they will carry out monthly fines for each tax return that is filed late, they have even gone so far as threatening criminal prosecution and time behind bars for unpaid tax debt.

This message, from SARS, comes in the wake of reports that it missed its first quarter tax collection target by R13.1 billion and if the trend continues, it will miss its overall revenue collection target by about R50 billion for 2017. ...

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HELP: SARS has requested me to submit an IT14SD



After you have submitted the Company tax return (ITR14), SARS may request you to complete an IT14SD.

The purpose of the IT14SD is to reconcile the information on the ITR14 to the VAT and PAYE submissions made during the year. The VAT information is made bi-monthly on the VAT 201 and the PAYE submission is made every month on the EMP201.

Below are some reasons why there may be reconciling differences between the ITR14 and the PAYE and VAT submissions. Remember, you only need to...

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The Tax Indaba 2017




The Tax Indaba is the largest annual gathering of tax practitioners, in-house tax staff members, government tax officials and tax academics. The Tax Indaba aims to involve all tax professional bodies in South Africa in order to add new variety and talent to benefit tax professionals who are seeking to refresh their knowledge and to learn about new tax-related developments.

To ensure continued relevance, the event is put together with the assistance of the whole tax community. The fiv...

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Unpacking the seemingly complex: Part-time and Casual Workers




One of the most often-misunderstood things is how tax on part-time and casual workers actually gets calculated. A topic often sparking a lot of debate, causing confusion too. A lot of people are taking on more than one job- if that isn’t already their only job- others opting for the part-time or casual work positions. Initially, whether you’re working as a full or part time employee you’re inclined to pay tax, SARS has noted out points which one should follow ...

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Delivery from SARS: Retirement Contributions Letter




So, you’ve recently submitted your tax return, received your assessment and were probably breathing a sigh of relief to be finished with the tax filing process for this year… then suddenly out of the blue you receive a confusing letter (**see bottom of page) referring to a “retirement contribution carry over balance”. You probably don’t even contribute to a retirement fund (i.e Pension, Provident or Retirement Annuity) which ends up making this letter seem even more confusing....

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HELP: SARS issued me with a penalty for old tax returns




So, you’ve recently submitted your tax returns and shortly after you’ve done that you receive a message informing you about admin penalties that have been charged against you. This has come as a shock, if not a concern, to many taxpayers. Thus, we’ve been inundated with a whole lot of questions from taxpayers asking about these penalties which have been charged against them. Fortunately, you’ll be able to work through these sudden charges. Below we’ve highlighted things you need to know as well as ways in which you can handle these penalties. ...

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Foreign Employment Tax Proposal




It seems like the tax season, this year, has brought about more changes and proposals than we could’ve ever imagined. In July 2017, the National Treasury announced further proposals to the Foreign Employment Exemption changes already announced in the February budget (see foreign employment blog). There has been a huge amount of confusion amongst taxpayers in South Africa and mainly those expats working out of South Africa....

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SARS ITR12 Updates



As you may be aware, SARS has implemented a few changes to the format of the tax return this year. One such change is the requirement for taxpayers to enter more details relating to their policies in the Medical and Retirement section.  The source codes used for 2017 have also had their fair share of changes too.

With that said, SARS recently highlighted some issues and technical hiccups on the new tax return relating to these updates. Below is a 'step-by-step' guide on how SARS would want you to handle these updates:

1...

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Section 12H Learnership Allowance




Training and development for employees plays a vital role in the growth and success of your business. But, finding affordable and correct tools might be where the concerns start creeping in. Suddenly you’re left thinking… “They’ll learn on the job. Resources are limited.”
Fortunately, you’d be pleased to know that the learnership allowance is intended to be an incentive for employers to encourage skills development within their workforce, with the hope to create jobs and economic growth....

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A Directors PAYE and UIF deductions



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...

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The low-down on Financial Statements for companies



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?




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 receiv...

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Alert: Change to Provisional Taxpayer Rules



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



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 ...

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Penalty FAQs



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.

Turnover Tax FAQs



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....

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Rental Income FAQs



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? ...

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Contract Workers FAQs



Contracting Benefits vs Salary?
You will still be able to claim deductions for medical, travel and RA directly regardless of how you are earning income.

Contract worker and the tax effects?
Contractors are taxed if they earn above the threshold. This is the same as a full time employee. 

Tax Thresholds? 
For the 2018 tax year, anyone under 65 years of age earning above R75 750 will not pay tax. 

Digging into the detail of Building Allowances



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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Rebate FAQs



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? ...

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Audit FAQs



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....

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Donations FAQs



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...

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IRP5 FAQs



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?...

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





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...

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Depreciation FAQs



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...

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