2018 Tax Season: SARS shortens submission period

Tax , ,

The annual tax filing season is upon us and acting SARS Commissioner, Mark Kingon, announced that the season will open on 1 July 2018 for eFilers. SARS branches will assist taxpayers from 2 July 2018. The filing season will then end on 31 October.

 

To improve efficiency, the season will be shortened by three weeks, which will allow additional time for SARS, taxpayers, and the tax fraternity in general, to deal with all tax verifications before the December holiday break.

 

Manual and provisional taxpayers submission deadlines:

 

Type of Taxpayer Channel Deadline
Non-provisional and provisional Manual – post or at SARS branch drop boxes 21 September 2018
Non-provisional eFiling or electronic filing at SARS branch 31 October 2018
Provisional eFiling 31 January 2019

 

Who does this shortened filing season impact?

 

  • All individual non-provisional taxpayers
  • Provisional taxpayers who opt to file at a branch
  • Provisional taxpayers who use eFiling

 

A taxpayer is completely exempt from submitting a tax return if all the following criteria apply:

 

  • The taxpayer’s total employment income/salary for the year of assessment (March 2017-February 2018) before tax was no more than R350 000.
  • Employment income/salary for the year of assessment was received from one employer.
  • The taxpayer has no other form of income, e.g.:
  • car allowance or company car fringe benefit
  • business income
  • taxable interest
  • rental income
  • income from another job.
  • The taxpayer does not want to claim for any additional allowable tax related deductions or rebates (e.g. medical expenses, retirement annuity contributions, travel expenses, etc).

 

Should you have any questions related to the 2018 tax return season, please feel free to contact us.

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

 

References:

 

Sars.gov.za. (2018). Tax Season. [online] Available at: http://www.sars.gov.za/TaxTypes/PIT/Tax-Season/Pages/default.aspx [Accessed 5 Jun. 2018].

 

Fin24. (2018). SARS cuts deadline for tax returns. [online] Available at: https://www.fin24.com/Money/Tax/sars-cuts-deadline-for-tax-returns-20180604 [Accessed 5 Jun. 2018].

 

Sars.gov.za. (2018). 4 June 2018 – Tax Season 2018. [online] Available at: http://www.sars.gov.za/Media/MediaReleases/Pages/4-June-2018—Tax-Season-2018.aspx [Accessed 5 Jun. 2018].

Tax deductions against salary earnings

Tax , ,

Our clients who earn only a salary will know that very few tax deductions are available against salary income for income tax purposes and whereby they may reduce the taxable income derived ultimately from such remunerations. Section 23(m) of the Income Tax Act[1] provides that none of the deductions ordinarily available to taxpayers in terms of section 11 are allowed against salary income, other than for a limited few. We set out these deductions which are available below:

 

  1. Contributions made by taxpayers to a pension fund, provident fund or retirement annuity fund may be deducted against salary income in accordance with the provisions of section 11F;
  2. To the extent that an individual incurs legal fees, wear and tear-related costs or bad or doubtful debts as part of his/her employment, such expenditure will be deductible.[2] (Although it is possible that a wear and tear-related allowance may be available against a laptop or textbooks acquired as example, it is in our experience practically highly unlikely for legal fees, bad debts and doubtful debts to arise from an employment trade);
  3. Where amounts received, either as a restraint of trade payment or as ordinary remuneration for employment services rendered, are refunded by the employee, those amounts refunded may be legitimately claimed as an income tax deduction;[3] and
  4. Expenses incurred towards rent of, cost of repairs[4] of or expenses in connection with any dwelling, house or domestic premises, those costs may be claimed as deductions, to the extent that it is incurred as part of the individual’s employment and on condition that it does not offend the provisions of section 23(b) which deal with “home office” expenses.

 

Other than for the above, very few other deductions are available for individual taxpayers earning only a salary. Outside the ambit of section 11, the only other deductions which we typically encounter are medical aid contributions incurred, amounts claimed against travel allowances received or donations made to qualifying public benefit organisations. Of late, investments in section 12J “venture capital companies” may also be claimed as income tax deductions against salary income.

 

The above limitations only apply to salaried income received from employment though. Where an individual is also engaged in another trade (such as the renting out of an apartment), the above limitations do not apply to that separate trade. In such case, section 23(m) will not make the deductions in section 11 unavailable, although this is only as relates to the separate (rental) trade.

 

[1] No. 58 of 1962.

[2] Sections 11(a), (c), (i) and (j) respectively.

[3] Sections 11(nA) and (nB) respectively.

[4] In terms of section 11(d).

 

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

What should you consider when investing in a business

Business , ,

You have worked hard for many years, and have finally saved enough funds and mustered the courage to take the big leap that you have been dreaming about for such a long time… you are going to invest in your own business.

 

You have found the perfect business and is excited about your new journey, when you suddenly realise, however, that you have never been in this situation, and suddenly have no idea what to do next.

 

The first step

 

It is important to understand what you wish to gain out of your investment. Some people may solely invest in a business for financial gain, while for others it may be fulfilling a life-long dream, or to chase a very specific passion, such as having the opportunity to jump out of an airplane every single day through your newly acquired skydiving school, for instance.

 

Although motivation will differ for each person and will likely include a number of factors, it is important to understand what drives your decisions, in order to invest smartly.

 

Start with the end in mind

 

Once you understand the why behind your investment decision, it is a good principle to start with the end in mind. Ask yourself where do I want to be in the next three to five years (skydiving every day, the richest person in my street, having loads of free time, etc.) and how you will be able to leverage your business to get you there.

 

Good questions to ask might include –

  1. Is the business scalable (the ability to multiply a business model);
  2. Is the business labour/time intensive;
  3. Do you have adequate and necessary skills to manage the business;
  4. Are you aware of all the risks that you are assuming through investment;
  5. Is the price that you are willing to pay for the business substantiated and reasonable;
  6. Etc.

 

Practical considerations

 

In practical terms, there are a number of ways in which to invest in a business, primarily including acquisition of a going concern, as opposed to equity/members interest in an existing entity. It is also important to understand the advantages/disadvantages of the structure in which you choose to invest. You might decide to invest as a sole proprietor, through a company, a corporate structure or a trust (etc.) for instance.

 

The above considerations can have a major influence on a variety of factors, including statutory risk, tax consequences, contracting procedures, etc. and if the process is not approached correctly, it can cause many unnecessary headaches in the long-run.

 

Summary

 

Investing in a business, is no doubt always a very exciting prospect which, if approached correctly, can have a profoundly positive impact on a person’s life. It can be a precarious process, however, if not negotiated carefully.

 

It is therefore recommended to find a credible and experienced partner, to help guide you through the process, and even to further strategically aid and assist you post the investment.

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

How the VAT increase affects your business

Business , ,

Consumers and suppliers have by now had an opportunity to familiarise themselves with the increased Value-Added Tax (VAT) rate of 15% since 1 April 2018. There are however many technical considerations related to the increase that remain unclear. One such an uncertainty is with regards to deposits paid prior to the effective date of the increase, while goods and services are only rendered thereafter.

 

VAT vendors often require that consumers pay a deposit to secure the future delivery of goods or services (for example, an advance payment for the manufacture of goods, bookings in advance for holidays or accommodation etc.). The deposit paid by the consumer is then off-set against the full purchase price once they eventually receive the goods or services. The question arises what VAT rate the consumer will finally be subject to, where they paid a deposit before 1 April 2018, but the actual delivery of goods or services only takes place thereafter.

 

The answer to this question is found in the time of supply rules contained in section 9 of the Value-Added Tax Act.[1] In terms thereof, the “time of supply” of goods and services is at the time an invoice is issued by a supplier, or the time any payment of consideration is received by the supplier, whichever is the earlier. Two important concepts stem from this rule.

 

Firstly, an “invoice” needs to be issued by a supplier. In terms of section 1 of the VAT Act, an “invoice” is a document notifying someone of an obligation to make payment. It is therefore not necessary that a “tax invoice” – which has very specific requirements – needs to be issued. If consumers received only a “booking confirmation”, “acknowledgment of receipt” or similar document prior to 1 April 2018 that did not demand payment (such as tax invoice or pro-forma invoice), the time of supply was not triggered, and consumers will be subject to the 15% VAT rate once the goods or services are finally delivered after 1 April 2018.

 

Secondly, any deposit that was paid by the consumer, would have had to be applied as “consideration” for the supply of the goods or services to constitute “payment”. In this regard, consumers are largely dependent on how VAT vendors account for deposits in their financial systems. If deposits are accounted for separately (which is often the case with refundable deposits or where there are conditions attached to the supply) and only recognised as a supply when goods or services are received by the consumer, the deposit (although a transfer of money has occurred), would not constitute “payment”. For example, the time of supply may only be triggered once a guest has completed their stay at a guest house after 1 April 2018, resulting in VAT being levied at 15%.

 

The take away from the time of supply rules is therefore that payment of a deposit prior to 1 April 2018 does not necessarily result in a supply at 14% VAT and the rate to be applied is dependent on the specific facts of each case. Both consumers and VAT vendors should also take note that there are a number of rate specific rules that apply during the transition phase, and are encouraged to seek advice from a tax professional when they are in doubt about the rate to be applied.

 

[1] 89 of 1991 (the “VAT-Act”)

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Korporatiewe beheer – Naamsveranderinge

Business , ,

Dit staan ʼn maatskappy of beslote korporasie vry om sy naam te verander indien verkies.  Vir maatskappye sal die naamsverandering ʼn spesiale besluit tot gevolg hê wat deur die aandeelhouers van die maatskappy goedgekeur moet word en in die geval van ʼn beslote korporasie moet die lede van die beslote korporasie die naamsverandering goedgekeur.

 

Voor die naam van die maatskappy of beslote korporasie verander kan word, moet voorgestelde name aan die “Companies and Intellectual Property Commission” (“CIPC”) voorgelê word vir goedkeuring. Daar kan vier opsies van moontlike name verskaf word aan CIPC in volgorde van keuse. Wanneer CIPC tevrede is met ʼn voorgestelde naam, sal hulle dit vir die gebruik van die maatskappy of beslote korporasie reserveer vir ʼn tydperk van 6 maande.  Die reservering kan ná 6 maande vir ʼn verdere tydperk van 1 maand verleng word, maar kan daarna nie verder verleng word nie en sal verval, waarna  ʼn aansoek weer ingedien sal moet word.

 

Die voorgestelde name van maatskappye en beslote korporasies moet aan verskeie vereistes voldoen soos uiteengesit in Artikel 11 van die Maatskappywet van 2008 (“die Wet”).  Hieronder volg ʼn lys van enkele van hierdie vereistes –

 

  • die naam mag woorde in enige taal insluit;

 

  • die naam mag nie dieselfde of verwarrend soortgelyk wees aan –
    • die naam van ʼn ander maatskappy, geregistreerde buitelandse maatskappy, beslote korporasie of koöperasie nie, tensy die maatskappy/beslote korporasie deel uitmaak van ʼn groep wat soortgelyke name gebruik;
    • ʼn naam geregistreer vir die gebruik van ʼn persoon as ʼn besigheidsnaam ingevolge die Wet op Besigheidsname, Wet no. 27 van 1960, nie;
    • ʼn geregistreerde handelsmerk wat aan ʼn ander persoon behoort, of ʼn handelsmerk ten opsigte van ʼn aansoek vir registrasie as ʼn handelsmerk in die Republiek ingedien is nie, of ʼn welbekende handelsmerk soos in Artikel 35 van die Wet op Handelsmerke, Wet no. 194 van 1993, beoog nie;
    • ʼn handelsmerk, woord of uitdrukking waarvan die gebruik ingevolge die Wet op Handelswaremerke, Wet no. 17 van 1941, beperk of beskerm word nie;

 

  • die naam mag nie valslik impliseer of voorgee, of sodanig wees dat dit ʼn persoon redelikerwys sal mislei om verkeerdelik te glo dat die maatskappy/beslote korporasie –
    • deel is van of geassosieer word met ʼn ander persoon of entiteit nie;
    • ʼn staatsorgaan of ʼn hof is, of deur die staat, ʼn staatsorgaan of ʼn hof bedryf, geborg, gesteun of onderskryf word nie;
    • besit, bestuur of bedryf word deur ʼn persoon of persone wat ʼn bepaalde opvoedkundige benaming het nie;
    • besit, bedryf, geborg, gesteun of onderskryf word deur, of die ondersteuning geniet van enige internasionale organisasie, buitelandse staat, staatshoof, regeringshoof, regering of administrasie van ʼn departement van so ʼn regering of administrasie nie;

 

  • die naam mag nie ʼn woord, uitdrukking of simbool insluit wat, in isolasie of in samehang met die res van die naam redelikerwys geag kan word as oorlogspropaganda, aanhitsing tot onmiddellike geweld of voorspraak vir haat gebaseer op ras, etnisiteit, geslag of geloof, of aanhitsing om skade te veroorsaak uit te maak nie.

 

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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