Tag: SARS
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Turnover tax deregistration
The Sixth Schedule of the Income Tax Act details the workings of the turnover tax system applicable to micro-businesses. Turnover tax is an optional system (with preferential tax rates) and is essentially a simplified tax system that is available for micro-businesses (businesses with a qualifying turnover of R1 million or less). The Sixth Schedule deals…
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Form requirements for objections
Dispute resolution with the South African Revenue Service (SARS) generally has a two-pronged approach. Firstly, taxpayers must present their case on the merits – this will include the factual basis and background that has led to the dispute. Secondly, and equally important (if not more so), is the procedural process. This deals with timeframes, form…
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Admin penalties for outstanding Corporate Income Tax returns
In general, all registered companies must submit corporate income tax (“CIT”) returns within 12 months of the end of the company’s financial year-end. This is applicable to all companies that are resident in South Africa, that receive source income in South Africa, or that maintain a permanent establishment or a branch in South Africa. On…
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Section 24C future expenditure
The South African Revenue Service (“SARS”) issued a binding private ruling (“BPR 315”) in accordance with sections 78(1) and 87(2) of the Tax Administration Act[1] on 10 January 2019. This ruling determines the application of the definition of “future expenditure” in section 24C(1) of the Income Tax Act[2] to a commodities purchase agreement. The applicant…
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Non-resident sellers of immovable property
Section 35A of the Income Tax Act[1] came into effect on 1 September 2007 and sets out the capital gains tax consequences of the sale of immovable property situated in South Africa in instances where the seller is not a South African tax resident. In terms of these provisions, the purchaser of the immovable property…
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Management’s responsibility
Throughout the audit of a set of financial statements, the phrase “management/director’s responsibility” appears. It is included in the engagement letter, the financial statements and the auditor’s report. But what does it mean? Management is responsible for the management of the business, for implementing and monitoring of internal controls in the business, and in terms…
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Different interest rates in tax
The Income Tax Act[1] contains definitions for various interest rates. These interest rates serve as the basis for interest calculations in income tax in different circumstances and can broadly be categorised into three main areas. Knowing the difference between these different types of interest rates could have a material impact on the amount of interest…
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Tax on retirement lump sums
Determining the tax consequences in respect of any lump sum benefits from retirement funds can be complex and various legislative changes have been incorporated over the last few years, to regulate and align the tax treatment of these benefits. Lump sum benefits are included in “gross income” in terms of paragraph (e) of the definition…
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Changes to bad debt allowance
Most South African businesses are at some point in time exposed to credit risk in the form of bad debts. Although taxpayers would undoubtedly prefer to recover the debts, the Income Tax Act[1] provides for some relief in cases where debts have become bad, or doubtful. Not only does section 11(a) provide for the deduction…
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SARS verifications, audits – when, why and what to do
Being selected for an audit and being selected for verification are two different processes. Verification: Once you have submitted your return, it could be selected for verification. A verification involves a comparison of the information per your return against the financial records and other supporting documents to ensure that the information completed on the return…
