Well we have been waiting for the Budget Speech, to see how this will affect us personally and in our businesses.  So here is a brief overview of the changes and how they affect you and your business.

 

Main tax proposals

•   Personal income tax relief of R9.5 billion

•   Relief for micro and small businesses

•   Implementing the dividend withholding tax at 15 per cent

•   An increase in effective capital gains tax rates

 

Proposals affecting individuals

 

Personal income tax relief

To ensure that the direct personal income tax burden on individuals remains reasonable, personal income tax brackets and rebates are adjusted to take account of inflation or “bracket creep”, as well as provide limited real tax relief. The 2012 Budget proposes direct personal income tax relief to individuals amounting to R9.5 billion.

 

The primary rebate has been increased to R11 440 per year for all individuals. The secondary rebate, which applies to individuals aged 65 years and over, is increased to R6 390 per year. The third rebate, which applies to individuals aged 75 years and over, is increased to R2 130 per year. The threshold below which individuals are not liable for personal income tax is increased to R63 556 of taxable income per year for those below the age of 65, R99 056 per year for those aged 65 to 74, and R110 889 for age 75 and over. For the rates for the 2011/12 tax year and the proposed rates for 2012/13 Click Here. 

 

Implementation of dividend withholding tax

As announced previously, the dividend withholding tax will come into effect on 1 April 2012, bringing an end to the secondary tax on companies. Pension funds that are exempt from income tax will receive their dividends tax free. For equity reasons it is proposed that the dividend withholding tax come into effect at 15 per cent – five percentage points higher than the previous secondary tax on companies’ rate. Income from capital can be derived as interest income, dividends or capital gains, all of which should be taxed equitably.

 

High-income individuals tend to receive a larger portion of their income in the form of dividends and capital gains. The higher rate will also help to mitigate some of the revenue losses when switching from the secondary tax on companies to the new tax. The estimated net loss as a result of these changes will be R1.9 billion.

 

Increase in effective capital gains tax rates

Capital gains tax was introduced in 2001 at relatively modest rates and has remained unchanged for the past 10 years. This reform has helped to ensure the integrity and progressive nature of the tax system. To enhance equity, effective capital gains tax rates will be increased. The inclusion rate for individuals and special trusts will increase to 33.3 per cent, shifting their maximum effective capital gains tax rate to 13.3 per cent. The inclusion rate for other entities (companies and other trusts) will increase to 66.6 per cent, raising the effective rate for companies to

18.6 per cent and for other trusts to 26.7 per cent. These changes will come into effect for the disposal of assets from 1 March 2012

Proposed capital gains tax inclusion rates,     2011/12 – 2012/13

Proposed capital gains tax inclusion rates

 

	Current rates 2011/12	Proposed rates 2012/13
For individuals and special trusts For other persons	25% 50%	33.3% 66.6%

To limit the impact of capital gains taxation on middle-income households, the exemption thresholds for individual capital gains and for primary residences will be adjusted significantly. The following exemptions for individual capital gains are increased from 1 March 2012:

• The annual exclusion from R20 000 to R30 000
• The exclusion amount on death from R200 000 to R300 000
• The primary residence exclusion from R1.5 million to R2 million
• The exclusion amount on the disposal of a small business when a person is over age 55 from R900 000 to R1.8 million
• The maximum market value of assets allowed for a small business disposal for business owners over 55 years increases from R5 million to R10 million.

 

Business taxes                                                                 

In addition to the dividend withholding tax and adjustments to capital gains tax discussed earlier, several business tax measures are proposed.

 

Turnover tax for micro businesses

Several reforms of the turnover tax for micro businesses (with annual turnover below R1 million) were announced in 2011. Building on these reforms, micro businesses will be given the option of making payments for turnover tax, VAT and employees’ tax at twice-yearly intervals from

1 March 2012. It is further envisaged that a single combined return will be filed on a twice-yearly basis from 1 March 2013. The number of returns required for these taxes will fall from about

18 per year to only two a year in 2013. The build-up of tax liability will require such taxpayers to ensure that funds are available when payment is due.

 

Small business corporations

To encourage the growth of small incorporated businesses, government proposes to increase the tax-free threshold for such firms from R59 750 to R63 556. Taxable income up to R300 000 is taxed at 10 per cent; this threshold is now increased to R350 000 and the applicable rate reduced to 7 per cent. For taxable income above R350 000, the normal corporate tax rate of 28 per cent applies. These amendments will come into effect for years of assessment ending on or after 1 April 2012.

 

 

Carrie-Anne Diniz

CentsAccountability

©Copyright 2012, Cents & Accountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

Email: info@centsaccountability.co.za Website: www.centsaccountability.co.za

 

 

For months, we’ve been waiting for SARS to explain exactly how its new medical tax credits system will work, when it comes into effect on 1 March 2012. And finally, on 24 January 2012, SARS published a document, setting out guidelines for employers.

 

The Tax Watch experts have distilled all the important bits of this document, so read on to find out exactly what to do!

 

If your employees aged younger than65 belong to a medical scheme…

…Then they’ll get a credit each month of:

 

• R216 each for the main member (your employee) and one dependent;
• R144 for each additional dependent.

 

If your employee is older than 65 but hasn’t retired…

…And you’re paying the contribution amount on his behalf; this becomes a taxable fringe benefit. BUT the 65-year-old can claim the full medical scheme contribution as a deduction through the payroll and as such would not suffer any impact.

 

If the 65 year old (and older) employee has retired, but you’re still paying the medical scheme contributions…

The fringe benefit remains non-taxable.

 

Update your payroll system before 1 March 2012 to avoid penalties

SARS won’t accept excuses from you! The onus is on the employer to make sure the company’s payroll system is updated, specifically to show:

 

• The correct credit amounts (as stated above);
• The correct tax treatment of employees older than 65 (make sure the system is calculating and deducting employees’ tax, as well as UIF and SDL levies correctly).

 

Caution! If you don’t update your system, you’ll be declaring and withholding the incorrect amounts of employee’s tax. SARS will pick this up, and you’ll be penalised!

 

Your employees will probably take home less pay

This change may not be very kind to your employee’s pocket… Some employees will take home less pay, because you’re withholding more tax from their salary. It’s a good idea to alert your staff to the changes. Send them a letter or an email explaining this new process and be prepared to answer their questions.

 

Use these NEW source codes on your employee tax certificates

SARS has made some changes to the existing source codes for deductions relating to medical aid contributions paid by the employer. SARS has also added two new source codes, which you can use.

 

Code 4474 is now for: Employer’s medical scheme contributions for employees not included under code 4493. As of 1 March 2012, the contributions paid by an employer on behalf of an employee 65 years and older and who hasn’t retired from that employer should also be reflected under this code.

 

Code 4493 is now for: Employer’s medical aid contributions for an employee who qualifies for the “no value” provisions in the 7th Schedule. PLUS SARS has re-activated source codes that it had previously deactivated. So you can start using these again! In fact, they’ll be made

available on eFiling again from August 2012.

 

Download these new source codes (www.centsaccountability.co.za) today!

 

Remember: Your staff will only really see the impact of the changes in 2013, when they have to submit their tax returns for the 2013 tax year (i.e. 1 March 2012 to 28 February 2013).

 

Likewise, you’ll see the changes when you prepare the IRP5s and IT3(a)s for your employees in 2013, before you submit the company’s documents to SARS in 2012.

 

Don’t delay! You’ve got a few weeks left to update your payroll system and get to grips with these changes.

 

Send us your tax questions!

Send your Tax and Vat queries to info@centsaccountility.co.za  and we will answer them  in the next issue.

 

Carrie-Anne Diniz

CentsAccountability

Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.

©Copyright 2012, Cents & Accountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

Email: info@centsaccountability.co.za Website: www.centsaccountability.co.za

 

SARS is gleefully warming up for the approaching provisional tax deadline at the end of February 2012.

SARS knows that there are a lot of taxpayers out there who are GOING to make mistakes this provisional tax season.

Some won’t even make the deadline.

Others will get hopelessly lost in the quagmire of rules, procedures, forms and calculations.

SARS is waiting for these taxpayers to fall. Because when they do, it’ll slap them with penalties and interest charges!

Hand in your provisional return late – even 1 minute late – and you’ll be paying SARS an administrative penalty of up to R4 000! And this penalty amount doubles after thirty days… Plus interest.

Pay SARS the due tax late, and you’ll owe it 10% of the penalty amounts. Oh, and don’t believe for one second that SARS will listen to your excuses… Pay now, argue later, it says.

 

Are you a provisional taxpayer?

 Provisional taxpayers are:

• Individuals who earn income from a source other than a formal job.
• Individuals who earn interest on investments (over R20 000 in value), or income from renting properties or running a private business (e.g. home-based nail salon).
• Companies.

 

With the help of tax experts who’ve helped countless clients make it through the provisional tax season in one piece, if you need assistance in working out and submitting your provisional tax Click Here.

 

Carrie-Anne Diniz

CentsAccountability

Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.

 

©Copyright 2012, Cents & Accountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

Email: info@centsaccountability.co.za Website: www.centsaccountability.co.za

When you come to complete your company VAT return, do you wish you had someone to answer all your questions?  Well I plan to share some VAT tips with you this week.  Here are 2 tips, by using these tips you will avoid being caught out during a VAT audit.

 

Bad Debits

• Claim back the VAT paid on debts

Claim back the VAT paid on all your debts that have become bad or irrecoverable!

 

On large contracts the 14% paid over to SARS may represent a substantial claim.  Even on smaller debts that that have been classified as irrecoverable, the cumulative amount of adjusting input tax claimable may be surprisingly large.

 

If the debt is already given up as bad debt, there’s no point in compounding the damage to your company by forgetting to claim the VAT back.

 

• Write off the debt before claiming

You must have accurately written off the debt before you can claim the input VAT.

 

Don’t claim any adjusting input tax for provisional bad debts, SARS will disallow this.

 

• Don’t include interest in your calculation

When working out the input tax on your bad debts, do your calculations only on the original invoice amount not honoured by the customer.  Don’t calculate the VAT on any interest you may have charged, as there is no input or output tax on interest.

Entertainment

Input tax calculated on business travel is a major issue.  Do you know what you can and can’t claim? Can you claim on meals?  Are entertainment claims always deductible?

• No free meals for clients

You can claim the VAT relating to your employee’s meals and not the meals of any of your clients.

Carrie-Anne Diniz

CentsAccountability

Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.

 

©Copyright 2011, Cents & Accountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

Email: info@centsaccountability.co.za Website: www.centsaccountability.co.za

It’s our mission to keep you on top of tax deadlines so you are 100% in control of your company’s taxes. We’ve rounded up the most important deadline dates coming your way in 2012 so you can diarise them now and start preparing.

We’ve also highlighted some new tax rules that kick into effect in the New Year, so you know exactly what to expect.

Take a look:

1.    Give SARS an IT14SD to clear your name

In November 2011, SARS introduced a new form that companies must complete. Called the IT14SD, it’s basically a declaration where you reconcile your information for PAYE, income tax, Vat and Customs. SARS uses it to check if there’s any mismatch in the information you supply to SARS.

2.    Submit your provisional tax return by 29 February 2012

If you submit your provisional return late, SARS will slap you with administrative penalties, ranging from R250 to R4 000 for each month the submission is late. Late payment of the actual tax sees another 10% added to the penalty amount. Ouch!

The bad news is that you can’t escape the penalty. But you can shrink the interest charges by using the voluntary third payment.

3.    On 1 March 2012, kiss medical aid deductions goodbye!

In the 2011 Budget Speech, the Minister of Finance announced the proposed conversion of medical deductions to medical tax credits, with effect 1 March 2012. What’s more, SARS has approved the new list of medical expenses that will qualify for a deduction.

4.    Dividends Tax comes into effect on 1 April 2012

South Africa is phasing out the Secondary Tax on Companies (STC) paid on company dividends. And that this is being replaced by a withholding tax on dividends (WTD).

Caution! Management or shareholders of the company paying the dividend could become personally liable for the tax, penalties and interest if they get it wrong.

5.    Section 11(bA) deductions dry up on 1 April 2012

The Tax Laws Amendment Bill (TLAB) is proposing that Section 11(bA) be deleted from our tax laws. It applies to interest or finance charges you incur when you buy assets for your business – but before you actually bring the assets into use. It allows you to accumulate the interest, known as pre-production interest – and then deduct it as a lump sum in that same year of assessment.

6.    Your PAYE annual reconciliation will be due on  31 August 2012

By now, you should have the process of submitting EMP501s and EMP201s down to a fine art!

7.    The property tax break expires on 31 December 2012

SARS has a tax break for you – a property transfer window period. It allows you to transfer property out of a trust, CC or company and into your name and without paying Capital Gains Tax (CGT) (paragraph 51A of the Eighth Schedule to the Income tax Act, Secondary Tax on Companies (STC) transfer duties as well as dividends tax.

 

Carrie-Anne Diniz

CentsAccountability

Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.

 

©Copyright 2012, Cents & Accountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

Email: info@centsaccountability.co.za Website: www.centsaccountability.co.za

 

 

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