SARS Refund and sequestration

  Written by Nicci   Posted 2 April 2017

Why do I need to disclose my income tax number in my sequestration court application? Does this mean that I will not get any SARS refunds due to me whilst under sequestration?

Provisional Tax Submission

  Written by Nicci   Posted 31 March 2017

I freelanced for the 2016 tax year. I just applied to be a provisional taxpayer on SARS eFiling. Do I need to fill out an IRP3(pa)? And when is my first provisional tax payment due?

Can I deduct prepaid expenditure?

  Written by Evan   Posted 31 March 2017

Can you deduct prepaid expenditure? Answer the questions above to find out.

Yes, I can deduct prepaid expenses

This means that you can deduct prepaid expenses in the current year, before the goods are received or services have been rendered. In this instance, the tax treatment differs from the accounting one.

If you are a micro business (turnover less than R1m): you would include the relevant deduction under the "Adjustments: Allowable" section in your ITR14 in the block for "Other Adjustments: Allowable". ...

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Do I need to ring-fence my loss?

  Written by Evan   Posted 31 March 2017

Do you need to ring-fence? Answer the questions above to find out.

Yes, the ring-fencing provisions do apply

When using TaxTim to complete your tax return, click Yes in the Business / Property Rental section when asked about ring-fencing. If you're using SARS eFiling, you'll find this question in the Local Business / Property Rental Income section.

No, the ring-fencing provisions don't apply

When using TaxTim to complete your tax return, click No in the Business / Property Rental Section when asked about ring-fencing...

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Am I an Independent Contractor?

  Written by Evan   Posted 31 March 2017

Are you an Independent Contractor? Answer the questions above to find out.

There are three possible scenarios:

• You ARE an Independent Contractor. You should have no PAYE (employee's tax) deducted from your income. You need to register for Provisional Tax and you should be responsible for your own tax affairs. Make use of the Local Business Income section of your ...

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Should I register for Turnover Tax?

  Written by Evan   Posted 31 March 2017

Yes, you qualify for Turnover Tax

Please read our blog on Turnover Tax for how to register as a Turnover Taxpayer.

No, you don't qualify for Turnover Tax

You will have to submit normal returns as either an individual or corporate taxpayer.

Is my business a Small Business Corporation?

  Written by Evan   Posted 31 March 2017

Yes, my business is an SBC

You qualify for the special tax rates for a Small Business Corporation.

No, my business is not an SBC

You do not meet the definition of an SBC and therefore all profits are taxed at a flat rate of 28%.
If you need help completing your business tax return, try TaxTim.

Find out if you are a Provisional Taxpayer

  Written by Evan   Posted 31 March 2017

Yes, I am a Provisional Taxpayer

If you have not registered as a taxpayer then you need to do so! If you are registered on eFiling you can amend your tax types online: go to your eFiling profile and under the tab "Organisations" click "Request tax type" and insert your tax number under the provisional IRP6 block. You will need to complete an ITR12 and two IRP6 returns every year, learn all about provisional tax here. Don't worry, TaxTim will ask you all the right questions so that you complete your tax return correctly....

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Is a portion of my Foreign Income exempt from tax?

  Written by Evan   Posted 31 March 2017

Yes, I can claim up to R1,25m of my Foreign Income as Exempt

The first R1,25m of your foreign income will be exempt, the portion exceeding this amount will be taxed in South Africa. Either your employer will include the exempt portion on your IRP5, or you will need to include the exempt income under "Amounts not considered taxable" on your income tax return under the block for "Exempt amount i.t.o s10(1)(o)". Avoid the confusion, let TaxTim ask you all the right questions one-by-one so that you complete your tax return correctly, and get your maximum allowable tax refund....

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Can I deduct Home Office expenses?

  Written by Evan   Posted 31 March 2017

Yes, I can deduct home office expenses

This means that you would include the relevant deductions under the "Other deductions" section in your ITR12, in the block for Home Office expenses.

You will need to add up all the allowed amounts, then multiply them by the portion of your house that is contained by your demarcated, dedicated home office.

For example:
Rates (R2,400) + Electricity (R1,500) = R3,900
House is 60 square metres
Office is 3m x 4m = 12 square metres...

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Do I need to file a tax return?

  Written by Evan   Posted 31 March 2017

Yes, I need to file

No stress! Make submitting your income tax return quick, easy and - dare I say it - FUN by using TaxTim! First time users save 15% on registration. Get started now →

No, I don't need to file

This means you don't have to fill out a tax return for this year. Lucky you :)

Business Code Table

  Written by Evan   Posted 31 March 2017

Please choose the category of your business:

01 - AGRICULTURE, FORESTRY AND FISHING 02 - MINING AND QUARRYING 03 - FOOD, DRINK AND TOBACCO 04 - TEXTILES 05 - CLOTHING AND FOOTWEAR 06 - LEATHER, LEATHER GOODS AND FUR (EXCLUDING FOOTWEAR AND CLO...

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Rands

  Written by Evan   Posted 31 March 2017

SARS requires that certain amounts in foreign currencies must be translated into Rands when entered into your tax return. To do this you must consult the SARS average exchange rates tables that apply for each year, and use these specific values to convert the foreign amounts into Rands.

S10(1)(o)(ii)

  Written by Evan   Posted 31 March 2017

It is foreign income which  may not be subject to tax if you:

• Have a formal employment contract with a foreign employer,
• Are a South African tax resident,
• Spend at least 183 days  of a consecutive 12-month period outside of SA rendering services to your foreign employer, and
• At least 60 of these days are continuous or unbroken.

Note, the 183 days includes all calendar days i.e weekends, public holidays, annual leave e...

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Tax season

  Written by Evan   Posted 31 March 2017

Tax season is the period in which taxpayers must complete and submit their tax returns to SARS.

The South African Revenue Service begins tax season for individuals in July each year with tax season usually closing in October each year (prior to 2022, the season used to close in November).

Primary Residence

  Written by Evan   Posted 31 March 2017

A primary residence is the place that the taxpayer lives in for most of the year either alone or with their family.

1. in which a natural person or a special trust holds an interest; and
2. which that person or a beneficiary of that special trust or a spouse of that person or beneficiary -
   
   1. ordinarily resides or resided in as his or her main residence; and
   2. uses or used mainly for domestic purposes;

Public Office

  Written by Evan   Posted 31 March 2017

1. the President, Deputy President, a Minister, Deputy Minister, a member of the National Assembly, a permanent delegate to the National Council of Provinces, a Premier, a member of an Executive Council or a member of a provincial legislature;
2. any member of a municipal council, a traditional leader, a member of a provincial House of Traditional Leaders and a member of the Council of Traditional Leaders; and
3. a person occupying the office of president, chairman ...

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Source code

  Written by Evan   Posted 31 March 2017

A source code is a four digit identifier / number that SARS uses to capture information on the income tax return. It will usually appear alongside the amount it relates to. Source codes that might appear on your IRP5 are listed below. For business source codes please click here.

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Base Cost

  Written by Evan   Posted 31 March 2017

Base cost means the cost of an asset against which any proceeds (the price) upon disposal (sale) are compared in order to determine whether a capital gain (a profit) or loss has been realised.

Base cost includes those costs actually incurred in acquiring, enhancing or disposing of a capital asset that are not allowable as a deduction from income.

The following are included in the base cost of an asset: Acquisition cost, Incidental costs of acquisition and disposal, Capit...

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Proceeds

  Written by Evan   Posted 31 March 2017

Proceeds received for an asset is generally the amount, whether in money or some other form, that the taxpayer received, or is owed, on disposal of the asset.

Assets disposed of by donation, or in exchange for something which is not measurable in money, or to a connected person at a non-arm’s-length price, are treated as being disposed of for an amount received or accrued equal to the market value of the asset.

Spouse

  Written by Evan   Posted 31 March 2017

Generally the spouse of the taxpayer is anyone that they are in union with as recognised under South African law and religious recognition.

"spouse", in relation to any person, means a person who is the partner of such person -

1. in a marriage or customary union recognised in terms of the laws of the Republic;
2. in a union recognised as a marriage in accordance with the tenets of any religion; or
3. in a same-sex or hetero...

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Incur

  Written by Evan   Posted 31 March 2017

To incur something from a tax perspective would be to either pay for it using a form of currency or to be in the position where you will have to pay for something at some future date.

Public Benefit Organisation

  Written by Evan   Posted 31 March 2017

Generally this is an organisation that does not work for profit and does not pay tax in or out of South Africa. The organisation is most likely involved with charitable work.

1. which is -
   1. a non-profit company as defined in section 1 of the Companies Act, 2008 (Act No. 71 of 2008), or a trust or an association of persons that has been incorporated, formed or established in the Republic; or
   2. any branch within the Republic of any co...

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Disability

  Written by Evan   Posted 31 March 2017

It is a moderate to severe limitation of any person’s ability to function or perform daily activities. It is a condition that will last for longer than a year and needs to be confirmed by a medical practitioner on the ITR-DD obtainable from SARS. E.g. physical disability (such as wheelchair user, walking aids etc.), mental disability (such as clinical depression, bipolar disorder, dementia, schizophrenia and anxie...

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Connected person

  Written by Evan   Posted 31 March 2017

A Connected Person (in terms of a human being) is defined as either:

1. A relative of yours, including your -
   • Spouse (i.e a partner in a marriage or union recognised in terms of law or any religion, or in the same sex or heterosexual union which the Commissioner is satisfied is intended to be permanent)
   • Children
   • Grandchildren
   • Great-grandchildren
   • Parents
   • Grandparents
   • Great-grandparents
   • Brothers an...

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