While that may sound like music to our ears, what is really in store for South Africans? How will this new budget “strike a critical balance between saving lives and livelihoods while supporting inclusive growth,” as Godongwana says it will?

Let’s look at the 2022 Budget Speech Highlights:

What has changed?

Personal Tax Rates

You’ll be happy to see that personal income tax brackets will only be increased according to the predicted inflation rate of 4.5%.

• If you’re a taxpayer under 65 years: your tax-free threshold’s increased to R91 250 from R87 300.
• If you’re a taxpayer between 65 and 75 years of age: your firstR141 250 is tax-free (previously R135 150)
• If you’re a taxpayer over 75: your tax-free threshold’s increased to R157 900 from R151 10).

Medical Tax Credit

Treasury announced a very slight change for medical tax credits. The main member and first dependent are allowed a tax credit of R347 (a R15 increase) and R234 (a R10 increase) for all other dependents.

Although small, this increase is very welcome and not expected as the medical tax credit is not continually revised.

Small Business Tax

If your small business qualifies as a Small Business Corporation, Treasury announced some good news. Your SMC will benefit from an inflationary adjustment to their tax brackets to bring their tax in line with the tax threshold for individuals.

Turnover tax rates, however, have remained unchanged.

Sin Taxes

Excise duties on alcohol and tobacco will increase by between 4,5% and 6,5%. If you want to know how that’s going to affect your shopping basket:

• beer an extra 11c per can
• wine an extra 17c per bottle
• sparkling wine an extra 76c per bottle
• spirits an extra R4.83 per bottle
• cigarettes an extra R1.03 per packet and
• rolled cigar an extra R6.77 per 23 grams

New on the cards will be a tax on vaping products of at least R2.90 per ml from 1 January 2023.

What hasn’t changed?

Fuel levy

All motorists can breathe a sigh of relief. For the first time in over 30 years, the general fuel levy and Road Accident Fund levy will remain the same.

Capital Gains Tax

There were no changes to Capital Gains Tax this year.

Individuals: still must include 40% of the gain in their income, and the overall maximum effective tax rates for individuals remain unchanged from last year at 18%.

Companies and trusts: still must include 80% of the gain into their income, and the overall maximum effective tax rates for companies and trusts stay the same at 22.4% and 36%, respectively.

Dividends

The Withholding Tax on Dividends remains unchanged at 20%.

Donation Tax remains the same: 20% is levied on amounts over R100 000 per year and 25% on donation values exceeding R30m.

The Estate Duty threshold stays the same: above R3.5m, and up to R30m, estates will be taxed at 20%, and then at a rate of 25% above R30m.

Interest and investment exemptions

The threshold for interest exemption remains at R23 800 for those under 65 years of age and R34 500 for those over 65.

There was also no change on the contribution limit for tax-free savings accounts, the annual limit is R36 000, and the total lifetime limit is still capped at R500 000.

Corporate Tax

Corporate Tax is to remain the same at 28% this year for companies with years of assessment ending between 1 April 2022 and 30 March 2023.

However, as announced in 2021, there will be a reduction in the corporate tax rate to 27% for companies with years of assessments ending any date after 31 March 2023.

Lumpsum payouts

There are no shifts to the lumpsum tax rates.

Retirement deduction

The retirement laws which allow for the deductibility of provident, pension, and retirement annuity contributions also remain the same. The regime provides a capped 27.5% of the greater remuneration or taxable income to the maximum of R350 000 per year.

Although these points discussed here are just a summary of the more significant budget speech highlights and proposals, they are not yet legislated and may be subject to further changes. If there are any areas you need to understand further or if you would like to find out how these new plans may affect your business, contact the professionals for help.

Consider the experts

Dirmeik Consulting has an extensive understanding of tax and VAT laws and can give the correct and up to date advice on all your tax matters. We make sure to keep up to date with any new rules or regulations made by SARS.

Dirmeik’s tax experts can advise on all South African tax matters and endeavor to create the best solution for you and your business. Get in touch with us on our website.

The post A Closer look at the 2022 Budget Speech Highlights appeared first on Dirmeik Consulting.

PAYE is the amount of income tax that is deducted from your salary before you receive it. This system ensures that you don’t have to pay SARS between 18% and 45% of your earnings in a yearly lump sum. That’s good news.

Your employer will pay your portion every month directly to SARS according to each employees’ tax rates. These rates are calculated based on your basic salary, bonuses, benefits like a pension fund, medical aid, and other allowances.

Now, let’s get down to the Q&As on ‘what is PAYE’?

How do you get started?

Your employer, who is registered or required to register with SARS for PAYE, will pay the amount you owe to SARS by deducting the amount from your salary each month and paying it directly to SARS. Besides supplying your Employer with your personal details and income tax number, there is nothing else you will need to do. If you don’t have an income tax number, your employer can register you for one via their e-Filing. It’s essential that all your details submitted are accurate and current (especially your banking details) for any possible refund and to make sure your IRP5 is correct.

Who is it for?

The amounts deducted or withheld must be paid by the employer to SARS by completing the Monthly Employer Declaration called an EMP201. This declaration is a payment return in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF and/or Employment Tax Incentive, if applicable. These amounts then need to be submitted twice a year to SARS via an Employer Reconciliation Declaration (EMP501) which is the return that generates your IRP5.

How and when should it be paid?

PAYE must be paid to SARS by the 7th of the following month for the salary that is being declared. If the 7th of the month falls on a public holiday or weekend, the payment must be made on the last business day prior to it.

The following payment methods are available:

• eFiling – for the payment to be authorized Bia the employer’s bank account
• Electronic payments (EFT), using the correct reference number to allocate the payment to the correct period
• Payments at a bank: All payments can be made at any ABSA, Capitec, FNB, Nedbank, or Standard Bank branch.

How much will you pay?

The minimum percentage you will pay in tax is 18% of your taxable income. This is for individuals earning up to R216 200 per year. The subsequent tax bracket up to R337 800 requires a payment of R38 916 plus 26% for taxable income above R216 200, and it keeps going up from there. To view the 2022 tax table, click here.

How is PAYE calculated if you’re self-employed?

If you are self-employed and earn taxable income above the annual threshold of R79 000 for the current tax year, you must register as a provisional taxpayer. This involves twice-yearly provisional payments, and it is highly recommended that you have the cash available to pay these two lump-sum payments in August and February each year. Provisional taxpayers receive income other than a salary or remuneration from an employer—individuals who run their own businesses, such as freelancers, sole proprietors, and independent contractors. Commission earners and freelance artists can apply for a Tax Directive for a lower tax percentage rate.

Consider the experts

Dirmeik Consulting has an extensive understanding of tax and PAYE laws and can give the correct and up to date advice on all your tax matters. We make sure to keep up to date with any new rules or regulations made by SARS.

Dirmeik’s tax experts can help you to lower your tax liability and will endeavor to create the best solution for you and your business. Get in touch with us on our website.

The post What is PAYE? appeared first on Dirmeik Consulting.

The changes include a three-year lock-in period for taxpayers wanting to use their retirement funds for emigration and harsher punishments regarding tax-related offenses.

Let’s look at the proposed changes to both these bills, and how National Treasury has responded.

Retirement Funds and Emigration – change proposed in the TLAB

If you are planning on emigrating, you may have to think again – especially if you need to access your retirement funds to make the move financially viable. Retirement funds have always been a smart investment tool for South Africans. The reason being, you can benefit from tax-deductible contributions and enjoy tax-free interest, dividends, and capital gains on investment growth.

However, these new draft bills look to add an extra hurdle for SA residents looking to emigrate and take their funds with them.

Under the current system, members of preservation funds and retirement annuity funds may withdraw from their investments if they formally emigrate from South Africa for exchange control purposes, and the South African Reserve Bank approves their emigration.

However, changes in the draft TLAB will effectively phase out the concept of emigration for exchange control purposes. This means South Africans emigrating from the country will only be able to make a withdrawal when a retirement fund member has ceased to be a tax resident and has remained so for a consecutive period of at least three years.

Why a three-year lock-in period?

Recently, there has been a significant increase of South African’s formalising their status as ‘non-resident’ from both a tax and exchange control perspective, by using the financial emigration process. Along with this, Treasury has seen many South Africans withdrawing their retirement funds from South Africa to invest in more stable economies.

What’s the point of the rule?

Treasury said that this mechanism would ensure there is a sufficient lapse of time for all emigration processes to have been completed with certainty. But it won’t affect workers whose residence status changes for reasons other than emigration.

Treasury also said that when South Africans contribute to pensions tax-free, the understanding is that tax is deferred until benefits are received upon retirement. The intention was not for the government to provide a tax incentive for funds to be used for emigration.

What is the main objective?

To modernise the capital flow oversight system in a manner that balances the benefits and risks of more mobile people, financial flows, and cross-border transactions. Treasury does, however, recognize that many people’s working lives often include a combination of periods spent in SA and abroad.

“Our attempt is to reconcile the choice to emigrate and electing to withdraw a retirement lump sum with the design principle of deferred taxation upon retirement,” said National Treasury. “This also illustrates a horizontal equity point: tax residents who decide not to emigrate have to wait to retirement for withdrawals from retirement annuity funds.”

The regulations are expected to come into effect on 1 March 2021.

Harsher Punishments – change proposed in the TALAB

The second change recently proposed outlines the removal of the element of wilful conduct regarding tax-related offences. Let’s explore what this means for taxpayers.

Under the current tax regulations, a person must commit an unlawful act ‘wilfully and without just cause’ for the taxpayer to be found guilty of an offence. But the draft TALAB proposes to change the working of these provisions by removing the term ‘wilfully’ from the legislation. This, in fact, implies that SARS will no longer have the obligation to prove intent before a taxpayer can be found guilty of one of these offences.

What effect will this have? Critics believe that these proposed amendments may lead to criminalising negligent conduct, including genuine errors. But SARS says that this is not the case; instead, its ‘strategic objective’ is to detect taxpayers and traders who do not comply and make non-compliance difficult and costly.

SARS also mentioned that these taxpayers would experience a response ‘appropriate to the nature and degree of their non-compliance’, which may include friendly reminders to more intrusive and investigative engagements that enforce compliance.

If you are considering emigrating and would like to find out more about how these proposed tax changes may or may not affect you, Dirmeik Consulting can help. So get in touch with us with any queries you may have.

The post What To Know About Sa’s Recent Tax Changes appeared first on Dirmeik Consulting.

This incentive was created when Section 12J was inserted into the Income Tax Act in 2009, legislating the tax treatment of investments in VCCs. The tax incentive allows a holder of shares to claim a 100% tax deduction of the cost of the shares issued by an approved VCC. Since the incentive was introduced, South Africa has seen VCCs investing in SMMEs that include education, agriculture, renewable energy, hospitality and tourism, and student accommodation.

And now, no thanks to COVID-19, SMMEs will find it even more challenging to get access to funding. Not to mention the fact that in June 2021 the VCC tax incentive will end. Where will all these investors go? We are likely to see possible investors taking their money offshore. Their risk is just too high without this VCC tax incentive, especially now with the COVID-19 restrictions imposed on businesses.

Let’s take a look at the rules of the VCC tax incentive since its introduction:

• There was an initial investment limit of R750 000 per tax year and a lifetime limit of R2.25m.
• In 2011 these limits were removed to make the incentive more attractive.
• In 2019 new caps were introduced; investments by a natural person and trusts were capped at R2.5m, and for companies, investments were capped at R5m in a tax year.
• The deduction is subject to recoupment if the VCC shares are held for less than five years.
• The incentive is subject to a 12-year sunset clause that ends on 30 June 2021.

The VCC industry body, 12J Association of South Africa, released information on the impact the investments have made up until June 2020:

• Of the 106 VCCs managed and R9.3bn in assets, there have been 5 500 investors and an average investment amount of R1.7m per investor.
• More than 360 small, medium, and micro-sized entities have been invested in, which equates to 10 500 jobs across many industries.
• The incentive also shows cost-effectiveness at an average cost per job of about R126 000 for each job created. Other job creation-focused incentives in SA allow for R450 000 for each job created.

Initially, the tax incentive saw investors with very high net worth investing significant amounts – mostly to mitigate their tax liability from once-off capital gains tax bills. But lately, the incentive has seen investors such as doctors, lawyers, bankers and business owners with a big enough tax bill jump onboard. They see Section 12J as a way to mitigate some of their tax liability while also having an alternative investment vehicle. And, in a market where equities and property are struggling, this tax incentive is one of very few channels available to persuade investors to invest their money into South Africa for at least five years.

Unfortunately, we are now seeing how the impact of the COVID-19 pandemic has hit hard many of the industries qualifying for VCC investments. This, in turn, will make it difficult for SMMEs to obtain equity capital over the next two years – and we all know what this means, a far higher unemployment rate, and corresponding lower growth in the SA economy.

Now more than ever, we need the VCC tax incentive for SMMEs. There will be fewer investors – and, therefore, fewer jobs – without the Section 12J tax incentive. It’s just too attractive an offer to pass up. And so, as the 2021 deadline creeps closer, the 12J Association of SA and other industry players are set to fight to keep the tax incentive and have suggested that it be extended until at least 2027.

The post Time is running out for SA’s Venture Capital Companies’ tax incentive appeared first on Dirmeik Consulting.

Tax season deadlines for individuals

In each tax season, you are required to submit your income tax return (ITR12). This document assists SARS in calculating the tax payable on your income as well as the tax that can be deducted from your eligible expenses for the year of assessment that runs from 1st March 2014 to 28th February 2015.

The tax season for individuals runs from July to November every year.

The following deadlines are important to keep track of:

30th September 2015
This is the deadline for manual/postal submissions of your ITR12.

27th November 2015
This date marks the deadline for non-provisional eFiling online or at a SARS branch.

29th January 2016
Provisional taxpayers are permitted to submit their ITR12 outside of the July to November tax season and have until the 29th of January to submit via eFiling.

Other useful tax dates:

Employer EMP 201 deadlines

If you are an employer, you should be familiar with the requirement to submit your EMP201 every month. If you are a new employer, the EMP201 is a breakdown of the amount of tax payable by your employees, that is deducted/withheld by you from your employee’s salaries.

Each month you will need to complete the EMP201 form and submit it to SARS, along with a payment of the total amount deducted/withheld (if applicable), within 7 days after the end of the month.

As the 7th of each month doesn’t always fall on a working day, there are certain months that you should take note of in order to submit your EMP201 on time. We have listed the 2015/2016 dates below:

7th August 2015
7th September 2015
7th October 2015
6th November 2015
7th December 2015
7th January 2016
5th February 2016
7th March 2016
7th April 2016
6th May 2016
7th June 2016
7th July 2016

Tax Season made easy.

The pace of life is only moving faster and faster and balancing the personal and business aspects of your life is challenging even when there isnt added pressure to keep your taxes in order. The stress of not completing your tax correctly or on time can bring penalties and possible prosecution and to be honest with yourself, is there time for you to stay up to date with legislature changes to keep you tax compliant?

To reduce this stress, why don’t you have a Professional handle your tax? You never need to forget another deadline and you can be assured of continued tax compliance. Call Dirmeik Consulting today to find out how we can help with your taxes? Phone 021 421 4444.

The post Tax Deadlines 2015 appeared first on Dirmeik Consulting.

How the 2014 Budget affects you?

There were a number of tax proposals in this year’s budget speech that included:

Income tax relief

The 2014 budget has provided a total of R9.3 billion in income tax relief to households. Around 40% of this relief would go to lower income earners (below R250 000 per annum).

Sin taxes

It has become somewhat of a tradition for Pravin Gordhan to raise sin taxes each year and 2014 is no different. If you indulge in smoking or alcohol, brace yourself for more increases.

The price of a 340ml can of beer has gone up 9 cents.

Whiskey drinkers will pay R4.80 more per bottle.

A pack of twenty cigarettes has gone up 68 cents.

Fuel price

There is more pressure at the pumps. From April 2nd 2014, the fuel levy will increase by 20 cents a litre, of this 8 cents a litre will go towards the Road Accident Fund.

Retirement

The  tax tables that relate to lump-sum retirement payouts have been adjusted, benefiting lower income members who previously did not benefit from deductible contributions. The tax-free, lump-sum amount that is paid out of retirement funds will increase from R315 000 to R500 000.
Focus was placed on retirement planning and lowering the costs in the system. Around 6 million employed South Africans do not currently have access to employer-sponsored retirement plans, which is being given attention.

Small Business Development

Pravin Gordhan confirmed government’s commitment to assisting smaller businesses and helping black economic development. He mentioned that tougher measures were being considered to enforce the rule that small businesses must be paid within 30 days.

The budget has also allocated R6.5 billion over the next three years to support small and medium enterprises.

The tax burden on micro-enterprises would be lightened with the amendment of the turnover tax regime.

It was also under consideration that the graduated tax structure for small business would be replaced with a refundable tax compliance credit.

Fringe Benefits

The budget included a tax proposal that provides clarity on the valuation of company cars for fringe-benefit tax purposes.

Overall, the 2014 budget speech contained no big surprises. If however you are unsure of how the new announcements affect you or your business, contact Brett from Dirmeik Consulting on 021 421 4444.

The post 2014 Budget Speech. How it affects you? appeared first on Dirmeik Consulting.

For the average taxpayer, Capital Gains Tax may be an unknown entity but it is likely to affect you at some point in your life. You may even be surprised to know that it is not a standalone tax and actually forms part of income tax.

After successfully being used in many first world countries, Capital Gains Tax was introduced in South Africa taking effect from October of 2001. Capital Gains Tax was implemented to close various loopholes in the existing tax system and widen the tax net, in the hopes that personal taxation could decrease as a result.

In Laymen’s terms, Capital Gains Tax applies when you sell an asset for more than you purchased it. This is referred to as a ‘Capital Gain’. Taxpayers will be taxed on the profit they made from the sale. Therefore Capital Gains Tax is really a tax on the resale of assets. These ‘Capital Gains’ are however taxed at a lower effective rate than your normal income.

Who is required to pay Capital Gains Tax in South Africa?

All South African residents are required to pay Capital Gains Tax as well as any non-residents who sell fixed property of a capital nature in the borders of South Africa.

Which assets are included / excluded from Capital Gains Tax?

Often if someone is familiar with Capital Gains Tax, it is likely through the sale of property. But if you are a property owner, what does this mean for you?

If you are selling your primary residence, it is smaller than two hectares and the profit you are set to make is less that R1 million, in most cases, you will be free of paying Capital Gains Tax.

However, if you are selling a second property and it is not occupied as a primary residence, you will be liable for Capital Gains Tax. Similarly, if you have allocated a section of your primary residence for business use, you are required to pay Capital Gains Tax on that portion.

Lastly, if your business is registered in the name of a company, trust or cc, you are also liable for Capital Gains Tax.

Assets incurring Capital Gains Tax include:

• Any primary residence owned by a company, trust or cc
• Properties let to tenants
• Second properties including holiday homes
• Portion of a primary residence that is used as an office or let out
• Caravans and boats (unless used as a primary residence)
• Aircraft
• Sale of a business
• Investments including shares, policies, etc

Assets excluded from Capital Gains Tax include:

• Primary residence in your name providing the property is not bigger than 2Ha and the profit does not exceed R1 000 000
• Private motor vehicle, if not used for business
• Any disability, illness or defamation payout
• Profit from the sale of small business due to retirement or ill-health (not exceeding R500 000 in that person’s lifetime )
• Personal belongings including jewellery, art, clothing, etc
• Winnings from a competition, lottery, casino, etc

Calculating Capital Gains Tax

There are many factors for each asset type that need to be taken into consideration during the calculation of Capital Gains Tax. If you are unsure, please contact a tax adviser who can provide you with the correct advice.

If you are looking for friendly, efficient tax advice, speak to tax consultant Brett from Dirmeik Consulting on 021 421 4444.

The post Capital Gains Tax South Africa appeared first on Dirmeik Consulting.

By definition, an accountant is a person involved in the financial side of a business and whose job it is to accurately maintain or inspect financial records. However they also play a key role in business, providing advice on the strategic direction of a company and also ensuring the organisation runs as efficiently as possible.

An accountant may be employed full time in an organisation, work on a freelance basis or operate their own business. As financial activities are present in any business, accountants can work across many different industry sectors.

The exact scope of work an accountant handles depends on their role in the business or organisation and is dependent on their training. These roles can include a forensic accountant, tax specialist, computer science accountant, financial reporter, planning & management accountant, auditor, etc.

Accountants have generally graduated from a university or college with a BCom (Acc) or BCom (Hons)(Acc) and CTA (Certificate Theory of Accounting). In order to add value to their employer or clients, they become part of a professional body such as SAIPA.

The added value of a good accountant

As mentioned in the opening paragraph, an accountant can be much more than someone who merely reviews financial information. Finding an accountant with business acumen can be a valuable addition to your organisation. Accountants affiliated with SAIPA receive ongoing training to ensure they are adding the most value to their clients or employers and that their advice and insight can steer an organisation towards financial growth.

Recently SAIPA reached out to small businesses to actively engage with their accountants regarding their growth plans. After all, accountants have often worked with many businesses and can identify the key steps you need to grow your business.

The post What is an accountant? appeared first on Dirmeik Consulting.

Tax calculators for employees

If you are an employee, SARS provides an easy to use tax calculator that will work out your PAYE, taxable income and the tax rates you will be required to pay.

You can visit the tax calculator on the link below:

https://www.taxtim.com/za/SARS-income-tax-calculator.php

Tax calculators for self employed / business owners

The best tax calculator is a tax consultant.

Tax calculators become more complex for business owners and self employed individuals. There are a range of factors that need to be taken into account when calculating the tax you are liable to pay. It is highly recommended to consult a professional who has in-depth knowledge of the South African tax system to advise what you may and may not claim for. By hiring a tax consultant, you will have peace of mind that your business or personal tax is being completed accurately. This prevents future penalties and interest that SARS may impose or worse, prosecution if you are unknowingly but falsely representing your earnings and/or expenses.

The best tax calculator is a tax consultant

If you are looking for a tax calculator, chances are you are requiring accurate feedback on what tax you are eligible to pay. While there are many technological advancements today, it is still difficult for a programme to truly understand you and your business. Simply put, if you want accuracy and reliability, we really recommend using a tax consultant.

At Dirmeik Consulting, we offer professional tax consultation services which offers many advantages to you:

You don’t need to be a Tax Expert

If you are a business owner or are self employed, you already know what you are good at. The chances are, you are focused on excelling and pioneering in your field. Time is money. Why take this profitable focus away from where it is best used? It’s almost impossible to become a pioneer in multiple areas. Keep your eye on the ball, stick to what you are best at. We can take care of your tax.

Save time

Completing SARS paperwork is often intimidating and is usually the last on the list of items you enjoy. Your time can definitely be spent better elsewhere and we are a lot more affordable than you might think. Dare we mention friendly too?

Remove the stress

If you are completing tax returns yourself, there will always be a worry that information may not be accurate, claims invalid or information you thought applied is now invalid. All of these can risk penalties, a SARS audit and even prosecution. It is possible to buy peace of mind, give us a call today.

Potentially save more money

We truly take the time to get to know you and your business. This allows us to advise you on what you can and cannot claim for. Potentially saving you money and accurately declaring your income and expenses.

We offer a friendly, professional tax consultation service at an affordable rate. Join the growing number of companies already enjoying the benefits of this service. Give Brett a call today on 021 421 4444.

The post Tax calculator appeared first on Dirmeik Consulting.

Following up from our blog on “who needs to register for tax?”, a similar frequently asked question we receive is “who needs to and when do you need to register for VAT?”. We will answer these and more questions in this article.

Who needs to register for VAT?

If you run a business that has a sales turnover exceeding R 1 million per year, then you are required to register as a VAT vendor. Should your turnover be less than R1 million it may still be beneficial to perform a voluntary registration as you can claim VAT back from supplier purchases and this is then deducted from the VAT you owe SARS.  If your turnover is less than R50 000 per annum, you will unfortunately not be able to register as a VAT vendor.

When do I need to register for VAT?

You should register as a VAT vendor if you predict your turnover to exceed R 1 000 000 in a 12 month period. If your turnover has exceeded this, then you are required by law to become a VAT vendor.

How to register for VAT?

You can either elect to register your business as a VAT vendor yourself or you can make use of an accountant / tax consultant to handle the whole process for you. It is worth noting that being VAT registered will take more administration time and you will be required to submit VAT payments to SARS according to the VAT cycle you are allocated. You will also be required to keep records according to the requirements SARS sets out for VAT vendors. Often this process is made much easier by using the professional services of an accountant / tax consultant.

Registering yourself as a VAT vendor

Should you wish to process your own registration for VAT, you can visit SARS and complete a VAT101 form. If you are a company, you can register in your business name, however if you are a sole proprietor or in a partnership, you must register in your own name(s).

The post VAT SARS appeared first on Dirmeik Consulting.

A common question we are asked is “How much do I have to earn to pay tax?” Each year SARS provides slightly different tax scales that are used to calculate income tax. In this article we will look at how much you will need to earn in order to be legally obliged to pay tax and how you can go about registering as a SARS tax payer.

How much do I have to earn to pay tax?

As an individual, your tax will be calculated by:

• Your age
• The total amount you earn
• Whether you contribute towards a Retirement Annuity or Pension fund

TIP: Remember that even if you do not earn a salary but are receiving funds from rental income, dividends, annuities, pensions, etc, by law you may be liable to pay tax. Please consult us to find out whether you are legally meeting your tax requirements.

The SARS tax thresholds provide the following age based exemptions for paying tax:

• If you are below 65 and earn less than R59 750 per annum, you do not have to pay tax
• If you are between 65 and under 75, earning  below R93 150, you do not have to pay tax
• If you are 75 and older, earning less than R104 150, you are not required to pay tax

If you are earning above these amounts, you can use the table below to calculate the tax that is payable

Tax tables for  financial year ending February 2012

When should I register for tax?

If your income is below the tax thresholds then you are not obliged to register for tax with SARS. However if you have reviewed the tax tables above and find you are earning an amount that is taxable, you will be required to register for tax and submit tax payments and tax returns.

TIP: If you are a business owner or individual, you are permitted to claim for certain business related expenses which can reduce the tax that you are liable for. Before you visit SARS, it is valuable to make an appointment with a tax consultant so that they can review your expenses and advise which can be claimed for.

How do I register for tax?

If you are happy to process all of the documentation yourself, you may register for tax at any SARS branch. However as tax consultants, we can also process your tax registration and submit tax returns on your behalf, allowing you to avoid any long queues. Most importantly, we will help you identify which business expenses can be legally offset against your total earnings, saving you a considerable amount of money. For expert advice and affordable, efficient service, contact Brett today on 021 421 4444.

[microinv id=microinv_1359361964]

The post How to register for SARS appeared first on Dirmeik Consulting.

First of all, Happy New Year! I hope your 2012 is a prosperous one. If you are starting a business in 2012 or looking to register a formal business structure, then this blog article is for you. We will briefly look at a few of the business structures you can register in South Africa and the reasons you would choose each one.

Closed Corporations

Since the new Companies Act came into effect in 2011 we have said goodbye to the registration of new closed corporations ( see “No More CCs”) as well as conversions to cc’s. Individuals are now encouraged to register private companies.

Sole Proprietor

The sole proprietor or sole trader is the simplest business structure and requires no admin to setup. It is easy and costs little to run. As the name implies, you are the sole person on which the business is based and there can only be a single person in this business entity. Your only requirement is to disclose your income to the tax man. You are permitted to deduct certain expenses from your income and it is recommended you seek the services of a professional tax consultant to ensure this is done correctly.  The main disadvantage of this business structure is that all assets are tied into your own name which means that should the business go under, creditors are permitted to take your personal assets in order to settle the debt.

Partnership

Like the sole proprietor, a partnership is cheaper and easier to run than other more formal business structures. A partnership can be created between 2 and 20 partners and requires a written agreement to be drawn up, preferably by a lawyer. Be warned, the same disadvantages apply as in the sole trader and the risk increases as the number of partners increase. If one partner is taken to court for personal expenses, their creditor is permitted to repossess the partnership’s assets to settle the debt.

Private Companies ( Pty) Ltd.

With the ceasing of new closed corporation registrations, private companies are now the most common form of business structure to register, especially for entrepreneurs. This business entity permits several people to join together and share in the ownership of a business. This in turn makes it easier to sell portions of the business in the future.

One of the advantages of registering a private company is that your business and private assets / debts remain separate. Therefore creditors cannot look to your personal assets to settle outstanding monies.

A private company can be registered for a single person or more and requires a MOI (Memorandum of Incorporation) to be registered at the CIPC. A private company is made up of shareholders (owners) and directors (managers) who in some cases will occupy the same roles.

There are a few requirements and prohibitions for companies. One of the requirements is to either submit an annual return or for smaller companies, an accounting review will need to be carried out. Private companies are prohibited from offering securities to the public and there are also restrictions in place for the transferability of shares.

Registering a business

Should you require the registration of a formal business structure or advice on the best choice for your unique requirements, feel free to contact Brett on 021 421 4444.

The post Forms of Business appeared first on Dirmeik Consulting.