With times as tough as they are right now, several clients have had to approach SARS to see if they can get their tax liability reduced.
Whether it is Income Tax, VAT or PAYE that is owing, SARS will look at the taxpayer’s ability (or not) to pay, and will come to whatever arrangement gives SARS the best achievable result. In other words, they would rather have half a loaf than no bread at all.
Tax
In common law, a trust is neither a legal entity nor a juristic person. The trust is actually the Trustees acting in their capacity as such. However, there are exceptions to this basic legal concept, and these are brought about by specific Acts.
I know of two such Acts –
There are two principal taxes that kick in when you die. The first derives from the fact that you are deemed to have sold your assets to your deceased estate at the moment of death at market value. That means that the gain in value of growth assets, such as shares in any companies, fixed property, investment cars, works of art etc, will be subject to Capital Gains Tax, usually at 18%. The first R300 000 is not taxed and your primary residence only gets taxed if the gain exceeds R2m, but these allowances don’t count for much if, for…
SARS are already hitting dormant companies with monthly penalties for failing to submit Income Tax returns. They are now gearing up to do the same to dormant companies that are registered as employers and have not submitted PAYE returns. They have started, as before, by sending out hundreds of demands for EMP201 and EMP501 returns warning that failure to submit can lead to penalties and legal action. So, don’t think that just because you haven’t traded or you don’t employ anybody, you’re off the hook. Yours is exactly the kind of company that they are going after. You can submit…
There’s no option if your VATable turnover exceeds R1m per annum. If it is less, then you can voluntarily register if it is expected to exceed R50 000 per annum. Let’s take a look at the pros and cons of voluntary registration. But first we need to establish whether , given that your turnover exceeds R1m, you need to register. If the R1m is made up of items not included below as exempt, then they are VATable. Exempt items/services include – Public road and rail transport Rental of residential property Approved educational services Salaries Certain financial services, such as…
The simple answer is that you can’t. SARS no longer issues Tax Clearance Certificates (TCC) and the reason is pretty obvious. They were valid for 12 months provided you kept your tax affairs up to date. If you didn’t, then you would be sitting with a document that looked fine but was invalid. So now, what you get is a PIN, which you pass on to the customer who asked for a TCC. They can then go on to efiling, enter your Tax reference number and the PIN and see whether your tax affairs are up to date. Your tax…
In principle all companies are taxed at 28% on their first R1 of taxable profit, but there are three exceptions where a tax threshold applies depending upon the classification of the company. Turnover Tax. This option was introduced for so-called micro-companies several years ago. It never caught on, mainly because a company could end up paying tax even if it traded at a loss. However, any company that adopted this tax system is only taxed on turnover exceeding R335 000. thereafter the turnover is taxed at 1% up to R500 000, 2% up to R750 000…
Now that SARS has established their monthly penalties on outstanding Annual Tax Returns, they have moved on to VAT returns. They are still only imposing monthly penalties on what appear to be randomly selected dormant (and of course, active) companies. They are now moving on to impose administrative penalties on outstanding VAT returns. This is upping the ante hugely as VAT returns are due every one or two months and the minimum penalty is R250 per month per outstanding return. So if there are say, 6 returns outstanding, the penalty will be R1 500 each month until they are…
Yes! And hurry! On 29 November 2019, SARS changed the game for dormant and shelf companies. After the flurry of uncertaintly, we are now fairly sure of SARS’ intentions, although they have only been applied erratically. 29 November 2018 SARS issues a statement to the effect that they will be imposing administrative penalties on all companies, with outstanding tax returns, including those that have not traded. 26 January 2019 SARS posts final demands on some companies (but not others) efiling profiles to submit their outstanding returns up to 2017, giving 21 business days to do so.
We have got to the point where we are reluctant to tell our clients about the SARS penalties because SARS themselves are being totally inconsistent. This is where we are at today 7 April 2019… On 29 November last year, SARS sent out a notice to the effect that they planned to implement administrative penalties against all companies with outstanding tax returns, including dormant companies. In early March 2019, we received about 400 emails and SMSs from SARS directed at clients stating that they had until March 29…
Today 4 April 2019, the South African Revenue Service (SARS), started imposing recurring monthly penalties (minimum R250 per return, maximum R13 000). This includes dormant companies! We are in posession of hundreds of identical emails and SMSs which simply state the following… Dear Taxpayer, A recurring penalty has been imposed to you. For more information please contact SARS Contact Centre on 0800 00 7277. Regards SARS We have no way of knowing to which client any of them refer as they do not mention the name or tax number. We have notified SAICA (the South African Institute…
So, SARS finally did it. On November 29 2018, they sent out a notice that they would start implementing administrative penalties against all companies (including dormant ones) which had outstanding tax returns. In March 2019, they sent emails and SMSs to those companies (we received over 400 on behalf of clients) advising that all outstanding returns had to be submitted by 29 March to avoid penalties, so it seems like March 30 is the BIG DAY! The penalties are likely to be at the lower end of the R250 to R16 000 range that they announced, but these penalties will…
If your company was registered before 28 February 2018, then an Annual Tax Return for the year or part year ended February 2018 is due at the end of February 2019 (assuming a February financial year end). Failure to submit it, even if the company did no trade, makes it liable for administrative penalties of R250 to R16 000 for each month that it is in arrears. If the company did trade, then an Income statement and a Balance Sheet must be submitted with the return. That means somebody has to do the bookkeeping and there are only 4 weeks…
So many of you have companies that are completely dormant. From 7 December 2018, if you have not submitted their company tax returns you can get hit with R250 per month or more administrative penalties! This will go back to 2009 and subsequent years. The adminitstrative penalties are actually R250 to R16 000 per month depending upon taxable income or assessed loss, so we can safely assume that the R250 will apply to dormant companies only as SARS specifically mentions that dormant companies must also submit returns. They first have to issue a final demand, but since they can post…
The Companies Act of 2008 had one little requirement that everybody ignored. Now CIPC is coming down hard! The Act s33 and the Regulation 30 say that if you are not required to submit your Annual Financial Statements with your Annual Return to CIPC then you must submit a CoR30.2 Financial Accountability Supplement simultaneously with you Annual Return. You have to submit these returns during the month following every anniversary of the date of registration of your company, even if it has never traded. Failure to do so will lead to de-registration and, once de-registered,…
Most of you use a car on company business. Should you own it or should your company or trust? There are two ways that you can be taxed depending upon whether you (or a trust of which you are a beneficiary) owns the car. If the employer company owns the car, then you will pay PAYE plus VAT on the private use of the car. The amount payable is determined by your tax bracket, whether you or the company pays the fuel and maintenance cost, how much business travel was done compared to private…
In a nutshell, there aren’t any, despite what SARS imply when they talk to us. SARS love to make out that the Public Officer can be held liable for the tax sins of the company, but there’s nothing in the legislation to support this. What is important is that all companies must appoint a Public Officer and that failure to do so can lead to penalties of R25 per day, which can amount to quite a lot of money over, say, 365 days. I’ve never known SARS to impose this penalty, but there’s always a first time. So what is…
The idea of Tax Clearances was a master stroke by SARS. If you have traded, you can’t get one unless you’ve done your bookkeeping and your tax returns. Many creditors will not pay unless the supplier produces a tax clearance certificate. Whether or not that is just a ruse to delay payment, the effect is that we often get people coming to us for an urgent tax clearance so that they can get a payment from a debtor. That’s when they learn that we’ll first have to do their bookkeeping (usually for three or four years), then their Provisional Tax…
We do the books for a lot of small companies and so often the boss expects the company to pay for his Big Mac. Not good. He is expected to feed himself, so the quick bites are not considered to be in the production of income and are therefore not tax deductible. From our point of view, we quote to do the company’s books, not the private account of the owner, so, if he (or she, though less commonly) eats almost daily from a filling station, Nando’s, MacDonalds or the like, we have to process the purchase to his loan…
There’s no VAT charge on letting of residential property, but be careful if you own a residential hotel, frail care facility, retirement home or similar long term accommodation So, you own a house or a residential unit and rent it out. That is not a vatable supply. If you own commercial property for rental, then that is vatable at the current rate of 15%. It gets interesting if someone stays in your guest house, B&B, hotel, retirement home, frail care home or the like. If the person stays for 28 days or less, then the full amount of charges attracts…
