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.
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Tax season always throws up some interesting and confusing calculations, but for many, the most confusing of all is how medical aid contributions and Out of Pocket medical expenses are treated.
SARS has just announced that if you earn less than R500 000 in a year, and fulfill a series of complicated criteria, you may not have to file a tax return for 2019.
Previously, SARS had communicated that if you earn less than R350 000 in a year you may not have to file a tax return.
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:Read more →
How to Change/Verify Your Bank Details at SARS
Posted 22 October 2018
SARS has recently issued a new guide with regards to updating your banking details with them. This was done in order to reduce the risk of refunds being paid into the wrong accounts and also to streamline the process, which has tended to be an onerous one in the past.
Change of bank details can be done:
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- in person at a SARS branch (SARS still prefers this way)
- via eFiling (Go to Maintain Taxpayer Registered Particulars Menu) Note, you will still need t...
Do You Need to Ring-Fence Your Business or Rental Losses for Tax?
Posted 10 October 2018
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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Be smart and save tax when receiving income from an Airbnb
Posted 14 May 2018
Taxpayers who earn Airbnb income often don’t know what they need to do when it comes to declaring this income to SARS. Sometimes taxpayers think that they don’t have to declare this extra income, or can hide it from SARS by not entering it on their tax return form - a big mistake!
The truth is that extra income earned from Airbnb income is taxable, and SARS needs to know about it. In some cases - if the amount earned (profit) outside of a salary is larger than R30,000 a y...Read more →
Rental Income FAQs
Posted 6 March 2017
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? ...Read more →
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.Read more →
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...
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How is Commission Taxed? 3 Ways Your Company Taxes Commission
Posted 14 April 2016
Our helpdesk receives hundreds of questions related to tax where commission is involved. A misconception that comes up time and time again is that people believe commission is taxed at a higher rate than what a fixed salary is.
This isn’t true!
Tax on commission is at exactly the same rate as a fixed salary.
The confusion comes from the fact that tax is calculated on a different amount each month (depending on your performance, of course), and this can result in different tax rates being applied month to month...
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The Smart Way to Save Tax when Renting out a Property
Posted 8 April 2016
Taxpayers who earn rental income from a second property of theirs often don’t know what they need to do when it comes to declaring this income to SARS. Sometimes taxpayers think that they don’t have to declare this extra income, or can hide it from SARS by not entering it on their tax return form - a big mistake!
The truth is that extra income earned from rental is taxable, and SARS needs to know about it. In some cases - if the amount earned (profit) outside of a salary...Read more →
What is Turnover Tax?
Posted 23 March 2016
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.
As the name implies, Turnover Tax is a type of tax, which is calculated against the turnover of a business, as opposed to a percentage of profit (i.e. income less business expenses) as per usual business tax. This difference reduces the administrat...
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4 Common Provisional Tax Penalties - And How to Avoid Them
Posted 29 February 2016
Seasoned provisional taxpayers – those people who earn income from sources other than, or in addition to a regular ol' salary or traditional payment from an employer - are all too familiar with the process of estimating taxable income and submitting provisional tax returns. Not once - but twice a year!
Yes, it's a bit painful (although TaxTim makes it super easy) but entirely necessary if you don't want to be lumped with penalties from SARS...
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2016 Budget Speech: Welcome Back, Minister! You Couldn't Have Returned Just for the Free Lunch?
Posted 25 February 2016
The 24th of February 2016 was supposed to be a watershed moment for the Economy of South Africa. The old-new Minister of Finance, Pravin Gordhan, was to deliver his budget for the 2016/2017 tax year and save South Africa from a financial pit-fall in the form of an International Ratings Agency downgrade. The jury is still out on whether or not this is possible. Immediately after the budget was revealed the Rand tumbled 2%, which doesn’t bode well for market sentiment. However, ...
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What You Need to Know About Changes to the Tax Clearance System
Posted 23 February 2016
Tax compliance makes its way into many aspects of life and business. Perhaps you’re considering applying for a tender, or for a foreign investment allowance to move funds offshore, or even looking to emigrate and leave our shores. These are just a few examples of instances where you may be asked by a third party to provide a Tax Clearance Certificate.
And until now, the course of action to obtain your certificate has been a tedious one.
Upon request, SARS would check its records and verify that the taxpayer had filed all required tax returns, paid all taxes, penalties and interest due, before releasing a Tax Clearance Certificate confirming a good standing...
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The Ins and Outs of Donations Tax
Posted 17 February 2016
Have you been the lucky recipient of a gift or donation from a generous family member of friend? Perhaps they struck it lucky on the Lotto and decided to share their winnings with you!
Or maybe you're the giving type and have donated cash, shares or even property to someone you felt deserved a little boost.
Irrespective of whether you're the giver or receiver of a donation or gift, it's good to understand donations from a tax perspective, and how to declare these to SARS.
Ready to find out?
Let's get started.
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Retirement Funds Tax Laws Effective 1 March 2016 - How SARS' New Changes Affect You!
Posted 10 February 2016
If you’re diligently putting money away for your retirement in the form of a pension, provident fund or retirement annuity, you may be curious – perhaps even a touch concerned – about the changes SARS has made to the retirement fund tax laws, which come into effect on 1 March 2016.
If you missed the news, here's a quick overview.
SARS have changed how contributions to retirement funds are treated from a tax perspective, as well as how your funds are managed when you retire...
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Calculate interest on late provisional tax payment
Posted 28 September 2015
SARS charges interest on late payments made toward provisional tax deadlines.
To calculate this late payment penalty, use the formula below:
Provisional tax amount x 10.25% x (days after deadline / 365)
Use the calculator below:
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Thank you Minister - we expected worse! 2015 Budget
Posted 25 February 2015
New Finance Minister Nene delivers his first budget with some “better than expected” tax increases. The fight against corruption was highlighted with the minster announcing a series of reforms and procedures to be introduced both to curb corruption and make doing business with the state easier. The minister announced that R25bn would be saved in expenditure over the next two years, but R16.8bn is to be raised this year via tax increases and a remarkably large rise in the fuel and road accident fund levies. To be honest, we expected greater tax increases from the minister, thankfully he spared us some of the pain! ...Read more →
2014 Budget - A move to economic transformation
Posted 26 February 2014
In delivering what could possibly be his last annual budget and perhaps in an election year a very pragmatic one, Minister Pravin Gordhan painted a rather positive picture for the future of South Africa, whilst at the same time warning of the impact the global economy is having on the South African economy. He too, had a “good story” to tell of how well managed the economy is and how we have survived the economic downturn of the last half decade. The minister, like his predecessors b...Read more →
Garnishee orders explained: How SARS can deduct penalties directly from your pay cheque and how to stop it
Posted 14 November 2013
The last days of the month are often the most exciting for employees as they look forward to spending their monthly pay cheques. Unfortunately for many taxpayers anticipation quickly turns to grief when the money they receive in their bank account is suddenly less than they had expected. Stress and anxiety then result in light of impending debit orders and monthly expenses that need to be paid.
Apart from the ordinary deductions that your employer takes off your salary each month - expenses for your benefit such as medical aid or a retirement / pension plan - there is another deduction that can take place unexpectedly: a garnishee order...Read more →
The effect of the 2013/14 annual budget speech on the average South African taxpayer
Posted 28 February 2013
It was with great enthusiasm that we at TaxTim awaited delivery by the Minister of Finance of his annual budget speech this afternoon, especially after some of the shocks experienced by taxpayers and tax professionals last year. Surprisingly he delivered a very mild budget in terms of individuals with the Minister stating, “No tax rises.” The main focus areas relating to tax in this budget speech were on compliance, tax evasion and big companies seeking to shift their income around the world in order to avoid higher taxes...Read more →
How to manage your tax affairs running a business in your own name as a sole-proprietor
Posted 1 October 2012
South Africa is brimming with entrepreneurs and small business owners who keep the economy running. These people may or may not be earning a regular salary too, but all of them operate a non-registered business in their own name - a so-called sole-proprietorship. In this blog post we will discuss how such a business pays tax, how it is taxed, and how to separate personal and business affairs to make tax deductions correctly.
To register or not to register as a company?
...Read more →
SARS is asking for more documents. Are they auditing me?
Posted 13 August 2012
For most people upon submission of their year-end income tax return, either nothing much will happen or a refund will be due, this being paid back within a matter of days. However in a small number of cases SARS requires extra documentation or proof to be submitted so that they can verify that everything you submitted in your tax return is correct. Don’t be afraid, although many people consider this an “audit” it isn’t nearly as frightening as that and doesn't mean you have done anything wrong. A true audit would be SARS requesting years of past documentation and opening up for examination all your tax affairs from previous years. ...Read more →
I'm retired at 65 years and older - what income tax benefits do I qualify for in retirement?
Posted 23 July 2012
It would seem that SARS often prioritises younger taxpayers who are still working and receive a constant flow of income. However for many older South African taxpayers over the age of 65 who have retired or are still working, there are actually quite a few benefits to enjoy.
Firstly at 65 the tax threshold above which you would even begin paying tax is higher, at R99 056 per year (in 2012 it was R93 150). What's more, those taxpayers who are older than 75 years of age get an even bigger break at R110 889 per year (in 2012 it was R104 261)...Read more →
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