HD Accountants

Accountants and tax consultants

021 785 3306

Here you will find some frequently asked questions regarding SARS, Tax, UIF and WCA

Once you register your business most people are not sure what needs to be regsitered.Here are some guidelines regarding your statutory registrations and deadlines

What must companies register for at SARS, and when must this happen?

Company Income Tax Register as soon as you open a bank account

Pay As You Earn (PAYE) Register as soon as you become an employer, even if you pay a salary for yourself

Value Added Tax (VAT) Register if you expect your turnover to reach one million rand.

You can register if your turnover exceeds R50 000.

How do I register for Value Added Tax?

To register a company for Value Added Tax (VAT) in South Africa, follow these steps:

Gather the required documentation: You'll need to have the company's registration number, bank details, a copy of the company's ID, and the details of the person who will be responsible for the VAT account.
Apply for VAT registration: You can apply for VAT registration by visiting the South African Revenue Service (SARS) website at https://www.sarsefiling.co.za/ and submitting an application form either online or in-person at a SARS branch.
Provide proof of registration: You'll need to provide proof of the company's registration with the Companies and Intellectual Property Commission (CIPC) or with the relevant industry regulator.
Wait for approval: SARS will review your application and either approve or reject your VAT registration. If approved, SARS will provide you with a VAT number and certificate of registration.
Start charging VAT: Once your company is registered for VAT, you must start charging VAT on all taxable supplies made by the company. You must also submit regular VAT returns and pay any VAT owed to SARS.

Note: It is important to ensure that all information provided during the VAT registration process is accurate, as this will affect the accuracy of your VAT returns and assessments. If you encounter any issues during the process, contact the SARS Contact Centre for assistance.

Need help with your VAT application?

What is VAT? (Value Added Tax)

Value Added Tax (VAT) is a type of indirect tax that is applied to goods and services in many countries, including South Africa. It is a consumption tax that is levied on the value added to goods and services at each stage of production and distribution.

VAT is designed to be a fair tax, as it is paid by the end consumer, but it can be recovered by businesses that are registered for VAT and make taxable supplies. Businesses act as tax collectors, collecting VAT from their customers and then paying it over to the government.

The VAT rate in South Africa is currently set at 15%. VAT registered businesses must charge VAT on their taxable supplies, and they can claim back VAT paid on their own expenses that are related to their business. The difference between the VAT collected and the VAT paid is the net VAT payable, which must be paid to SARS on a regular basis.

What is Income tax?

Income tax is a tax levied on the income earned by individuals, businesses, and other entities. It is a direct tax, meaning that it is paid directly to the government by the person or entity that earns the income.

Income tax is calculated based on a person's or business's taxable income, which is determined by subtracting allowable expenses and deductions from their gross income. The amount of tax owed is determined by the tax laws of the country where the income is earned and is usually based on a progressive tax rate structure, where the tax rate increases as the amount of taxable income increases.

Income tax is a critical source of revenue for governments, and it is used to fund various public services, including healthcare, education, infrastructure, and social security programs. The amount of income tax owed and the process for calculating and paying income tax vary by country, but it is typically an annual obligation for taxpayers

How do I register for Income Tax?

Most new companies registered at the Companies Commission (CIPC) get issued with a Company Tax number automatically, and this number is normally emailed to you. Individuals can register on the sars e filing website.

Need to register for income tax?

What returns need to be submitted for Company Income Tax?

In South Africa, companies are required to submit several tax returns to the South African Revenue Service (SARS). The specific returns that need to be submitted depend on the type of company, its tax obligations, and other factors.

Typically, companies in South Africa are required to submit the following returns:

Company tax return (ITR14): This return must be submitted annually to SARS and provides information about the company's taxable income, expenses, and other financial information.

Provisional Tax Return (IRP6) - these returns are used to make an estimate about your taxable income for a specific year, and then tax are paid over provisionally to SARS based on the estimated income.

What returns need to be submitted for Pay As You Earn ?

In South Africa, companies that have employees are required to submit several tax returns to the South African Revenue Service (SARS) related to their employees' salaries and other remuneration.

The specific returns that need to be submitted for Pay-As-You-Earn (PAYE) include:

Monthly Employer Declaration (EMP201): This return must be submitted to SARS on a monthly basis and provides information about the PAYE withheld from employees' salaries and other remuneration.

Annual Reconciliation Declaration (EMP501): This return must be submitted to SARS annually and reconciles the PAYE paid over the year with the amount that was declared on the monthly Employer Declarations.

Annual Tax Certificate (IRP5/IT3(a)): This certificate must be issued to employees by the company annually and provides information about the total taxable income earned by the employee and the amount of tax that was withheld by the company.

It is important for companies in South Africa to comply with their tax obligations and submit the necessary PAYE returns on time to avoid penalties and interest charges. Companies can submit their returns electronically through the SARS eFiling system.

What returns need to be submitted for Value Added Tax?

In South Africa, companies that are registered for Value Added Tax (VAT) are required to submit tax returns to the South African Revenue Service (SARS). The specific returns that need to be submitted depend on the frequency of the company's VAT submissions.

The returns that need to be submitted for VAT include:

VAT201: This is the standard VAT return that must be submitted to SARS on a periodic basis (monthly or bi-monthly). It provides information about the VAT due on the company's taxable supplies.

What is an accountant?

An accountant is a professional who is trained in the practice of accounting, which involves recording, classifying, and summarizing financial transactions to provide information that is useful for decision making and tax compliance. Accountants use their expertise in financial reporting, tax laws, and accounting standards to help individuals and organizations manage their finances and meet their tax obligations. Some of the common tasks performed by accountants include preparing financial statements, managing budgets, reconciling bank accounts, calculating and paying taxes, and providing financial advice. Accountants can work in a variety of settings, including public accounting firms, government agencies, corporations, non-profit organizations, and private practice.

What is an auditor?

An auditor is a professional who performs independent examinations of financial records and other relevant information to provide assurance that an organization's financial statements and records accurately reflect its financial position and performance. The objective of an audit is to form an opinion, based on evidence obtained, on whether the financial statements present fairly, in all material respects, an organization's financial position, results of operations, and cash flows in accordance with relevant financial reporting framework.

Auditors use various auditing techniques to gather evidence, including reviewing internal controls, testing transactions and balances, and examining documentation. They also communicate with management and other stakeholders to gain an understanding of the organization's financial processes and systems. Based on the evidence collected, the auditor will provide a written report that includes their findings and opinions.

Auditors can work in public accounting firms, internal audit departments, or as independent consultants. They must have a strong understanding of accounting and financial reporting principles and regulations, as well as excellent analytical and communication skills.

Do I need to pay tax?

Whether you are required to pay tax or not depends on various factors, including your income, residency status, and other sources of income. In general, if you earn income from employment, self-employment, rental properties, investments, or other sources, you are likely required to pay tax on that income.

In most countries, including South Africa, there are tax laws that specify the types of income that are taxable, the tax rates that apply, and the exemptions and deductions that are available. As a taxpayer, it is your responsibility to understand these laws and comply with your tax obligations.

If you are unsure whether you are required to pay tax, you may wish to consult a tax professional or the tax authority in your jurisdiction for guidance.

What is invoice basis and payment basis?

In the context of value-added tax (VAT), the invoice basis and payment basis refer to the timing of when VAT is recognized and accounted for.

Under the invoice basis, VAT is recognized when an invoice is issued to a customer. This means that VAT is recorded as an income in the business's books when the customer receives an invoice, even if the customer has not yet paid the invoice.

Under the payment basis, VAT is recognized when payment is received from the customer. This means that VAT is recorded as an income in the business's books only when the customer has paid the invoice.

The invoice basis is considered to be the standard method for recognizing VAT in South Africa. The payment basis is used less frequently and is usually only applicable in specific circumstances for sole proprietors.

When do I need to pay VAT?

Once you register for VAT SARS will issue a VAT 103 certificate which will indicate for which periods you will be registered, you will either be registered on even months eg January and February together, in this case the VAT for these two months need to be paid over by the 25th of March for manual submissions, and for e filing submission the last working day of March. If you are are registered on uneven months, eg February and March together, then the VAT will be paid over by end of April. These days most people file these returns via e filing, and most people seek the help of a registered tax practitioner to assist with the calculation of the VAT and the submission of these returns, because if you get these calculations wrong then SARS can issue quite hefty penalties!

Need help with your VAT submission?

What is PAYE? (Pay as You Earn)

PAYE stands for Pay As You Earn and refers to a system of tax withholding that is used to collect income tax from employees in many countries, including South Africa.

Under the PAYE system, an employer is required to withhold a portion of an employee's salary or wage each pay period and remit it to the tax authority on behalf of the employee. The amount of tax that is withheld depends on the employee's taxable income and the tax rates that apply.

The PAYE system is designed to be a simple and convenient way for employees to meet their tax obligations, as the tax is deducted from their income before they receive it. This also ensures that the tax authority receives a steady stream of tax revenue throughout the year, rather than having to wait until the end of the tax year to collect all of the tax owed.

The PAYE system is generally considered to be a fair and efficient way of collecting income tax, as it takes into account the employee's ability to pay and ensures that everyone pays their fair share of tax.

How do I register for PAYE?

PAYE is registered online via the sars e filing website. It is important to note that if you fail to register for PAYE, you may be subject to penalties and fines. Additionally, you may be required to pay the full amount of tax owed by your employees, plus interest and penalties, if you fail to withhold and remit the correct amount of PAYE.

Need help with your PAYE returns?

On 12 May SARS introduced a new single registration process, this changed the way you apply for your PAYE number, we can do the application online if your company is registered on e-filing and if all is in order we can have the PAYE number within 24 hours!

Types of Companies

non profit companies
state-owned enterprise
pty company
personal liability company
public company

Must a company compile financial statements?

all registered businesses must prepare annual financial statements;
financial statements are compiled internally or independently;
financial statements are compiled internally, unless they have been compiled independently by an independent accounting professional.

When is a company exempt from audits?

all pty companies with a public interest score of less than 100 and where all directors of the company are also the shareholders of that company.

What is an independent accounting professional?

a registered auditor;
a member of a professional body in terms of the auditing profession act;
a person qualified to be an accounting officer in terms of the close corporations act, 1984 as amended;
an independent accounting professional may not have a personal financial interest in the company or related company; or
during the past 3 years not be involved in any of the daily management of the company and not have been an officer or full-time employee of that business.

Which companies must be audited in terms of the 2008 Companies Act?

all public and state owned registered entities;
where a company memorandum of incorporation requires this;
a company that holds assets in a fiduciary capacity for persons not related to the company that exceeds R5 million at any time during the year;
any non profit company that was incorporated by the state or a state-owned company or any international entity;
any company that have a public interest score of 100 points or more and where the annual financial statements were internally compiled;
any company with a public interest score of 350 points or more.

Which companies must be independently reviewed in terms of the 2008 Companies Act?

non-owner managed profit and non-profit companies with a public interest score of 100 or more must be performed by a registered auditor;
non-owner managed profit and non-profit companies with a public interest score of 99 or less can be performed by an accounting officer.

How do you calculate the Public Interest Score of a Company?

one point for the average number of employees employed during the year;
one point for every R1 million or part thereof of turnover;
one point for every R1 million or part thereof of third party liabilities;
one point for every director or shareholder of the company;
one point for every member of any non profit company or a member of an association that is a member of the non profit company.

Click here for your Public Interest Score calculation

Contact Home

FREQUENTLY ASKED QUESTIONS