Niall Gahan Stella Adriaanse

How to stay on the right side of SARS. Tax How to stay on the right side of SARS.

Agenda Perspective Tax for Individuals Tax for Corporates Tax on Dividends Capital Gains Tax Important Dates VAT Registration PAYE Registration FAQ

Sole Proprietor/Partnership Perspective Sole Proprietor/Partnership Business/Owners are taxed as one and the same Taxed as individuals Should also be registered as provisional taxpayers. CC/Company Have separate legal personality and are taxed separately to the owners Corporate entities pay company tax. Will always be registered for provisional tax Individual Are liable to pay tax according to the prevailing tax tables as soon as their annual income exceeds the minimum threshold. May be registered as a provisional taxpayer depending on the income avenues' The South African Tax Act applies a residence basis of taxation – All income is taxed in South Africa taking into account foreign tax credits paid on assessment.

Tax for Individuals Individual tax is payable on any income and can include any of the following: - Salaries - Rental Income - Interest/Dividend Income - Profit Shares - Bonuses - Income in a Sole Proprietorship - Your share of income in a Partnerships

Tax for Individuals – Allowable Deductions Salary Earners Sole Proprietors / Partners Retirement Funding (RAF, Provident, Pension Fund) - Limited to 27.5% of the greater of PAYE income or taxable income excluding retirement fund lump sums – Any amount exceeding R 350 000 per annum will be carried forward by SARS All Expenses incurred in the production of income. Medical Aid Contributions - Tax rebate of R286 for taxpayer & first dependent pm Tax rebate of R192 for each additional dependent pm Retirement Funding & Medical costs operate on the basis as a salary earner. Donations - Sec 18A PBO approved organisations limited to 10% of taxable income excluding retirement lump sum payments

Tax for Individuals Annual Tax Tables 2016/2017 Taxable Income Taxation Calculation 0 – 188,000 18% of each R1 (over R 75,000) 188,001 – 293,600 R33,840 + 26% of the amount above R188,000 293,601 – 406,400 R61,296 + 31% of the amount above R293,600 406,401 – 550,100 R96,264 + 36% of the amount above R406,400 550,101 – 701,300 R147,996 + 39% of the amount above R550,100 701,301 and above R206,964 + 41% of the amount above R701,300 Primary Rebate: R 13,500

Tax for Individuals Can pay tax over to SARS in 1 of 2 ways: Via monthly PAYE deductions made by an employer on a monthly basis. The employer must issue an IRP 5 after the end of the tax year indicating the employees total earnings and the amount of tax deducted and paid over to SARS on the employees behalf. Via Provisional tax if no PAYE is being deducted by anyone. (Mostly the case of independent contracting professionals, i.e. yourselves)

Tax for Corporates (CC’s & Co’s) Corporate Entities can be taxed as: Micro Businesses Small Business Corporations Standard Corporate Entities Turnover: All invoices raised during a period Profit: Turnover less business related expenses

Tax for Corporates (CC’s & Co’s) Micro Business (i. e Tax for Corporates (CC’s & Co’s) Micro Business (i.e. Turnover < R1million) Turnover Taxation Calculation based on turnover (There is no expense deduction under this tax regime) 0 – 335,000 0% 335,001 – 500,000 1% of the amount above R335,000 500001 – 750,000 R1,650 + 2% of the amount above R500,000 750,001 and above R6,650 + 3% of the amount above R750,000

Tax for Corporates (CC’s & Co’s) Small Business Corporation (i. e Tax for Corporates (CC’s & Co’s) Small Business Corporation (i.e. R1million<Turnover< R14million) Taxable Income Taxation Calculation < 75,000 0% taxable income 75,001 – 365,000 7% of amount over R75,000 365,001 – 550,000 550,001 and above R 20,300 plus 21% of amount over R365,000 R 59,150 plus 28% of amount over R550,000

Tax for Corporates (CC’s & Co’s) Standard Corporation (i. e Tax for Corporates (CC’s & Co’s) Standard Corporation (i.e. Turnover> R14million and/or anyone with interests in multiple companies) Taxable Income Taxation Calculation Any Flat 28% of taxable income

Taxation on Dividends, Royalties and Interest Dividends are taxed at 15% final with holding tax from 1 March 2012. Royalties are taxed at 15% of the gross amount for non-residents and included on the tax return for residents Interest are exempt for the first R23,800 for individuals under 65 and R34,500 for individuals over 65. The balance are taxed at your annual rate.

Capital Gains Tax Capital Gains on the disposal of assets are included in taxable income. Maximum effective rate of tax: Individuals 16.4% Companies 22.4% Other Trust 32.8% An Event for CGT is triggered by disposal, sale, donation, loss, death or emigration of an asset.

Important Dates 28 Feb 2017: 2017 Tax Year end 2nd 2018 IRP6 Return May 2017: EMP501/IRP5 Reconciliation 2017 July 2017: IT12 2017 Tax Return due (Salaried Tax Payers not e-filing) 31 August 2017: 1st 2019 IRP6 Return November 2017: IT12 Tax Returns Due iro 2017. (Non Provisional Tax Payers e-filing) 31 January 2018: IT12 Tax Returns Due iro 2017 28 Feb 2018: 2018 Tax Year End 2nd 2019 IRP 6 Return 2017 IT14 Companies or CC’s

Important Dates PAYE/UIF/SDL – Due by the 7th of the month following the month of the deduction. Unless if the 7TH is on a weekend then the Friday before the 7th (EMP201) – You may not deduct this unless registered. VAT – Due by the 25th of the month following the preceding two months if filing and paying on e-filing the last day of the month

VAT Registration Turnover < R50,000 No registration possible 50,000 – 999,999 Voluntary registration > 1,000,000 Compulsory registration (21 days) You may not charge VAT unless you are a registered VAT vendor, i.e. you have been issued with a VAT number by SARS.

PAYE,UIF,SDL Registration - If you employ an individual in your practice you are required to register with SARS for PAYE and UIF. - If the payroll value exceeds R500,000 you need to register for SDL( Skills Development Levy) as well - Registration can be done online through e-filing -You may not withhold PAYE, UIF or SDL if you are not registered as an employer with SARS

FAQ Depreciation: This represents the wear & tear cost of an asset that is spread over its useful life. Example: Assume we purchase a PC for R9,999. This is recorded as an asset. However, SARS allows you to depreciate it over 3 years. We can therefore expense an annual depreciation amount on the computer of R 3,333 per annum which is tax deductable. Generally expense all assets under R 7,500 and capitalize all assets over R 7,500 (With the appropriate depreciation charge per annum allowable by SARS)

FAQ Depreciation: Description Allowable depreciation period Computer Hardware 3 Years Computer Software 2 Years Motor Vehicles 5 Years Furniture & Fittings Libraries Any expenditure under R7,500 can be expensed upfront

FAQ Outstanding Returns: What is the situation for existing CC’s Approach SARS immediately, either yourself or through a registered tax practitioner. You will be liable for certain penalties and interest. Like any condition, the longer you leave this the worse it will get. Penalties are raised on a monthly basis per return outstanding in accordance with the Tax Administration Act. What is the situation for existing CC’s Carry on operating exactly as before the new company’s act which became effective on 1 May 2011. Only effect is that new CC’s cannot be registered.

FAQ Benefits of separate business & private banking accounts Principle: Always keep business and private separate. Business record keeping is more efficient with as separate business account SARS is happy to tax any value coming into your account. Other Questions?