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TAX RETURN SUBMISSIONS
Tax return submissions
Pay As You Earn
Value Added Tax
Pay As You Earn
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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
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.
This by far the most difficult tax to register for in South Africa, in order to register for Value Added Tax you will require the following:
All the other taxes for the company, directors and public officers need to be up to date before SARS will consider your application
Once you take these documents to a SARS branch the officials will normally make an appointment with you to come for an interview. Once you have the date for the interview then ensure you are there at the arranged time and then someone will do the interview with you. During the process they will do a risks assessment, and if your risk is high then the application will be selected for a sight inspection. If this is the case a SARS official will contact you to make arrangements to come and insect your offices, if he is satisfied then they will complete the application process.
Since 10 May 2014 SARS introduced a single registration process whereby you only need to go to SARS once to verify your information, and then from there you will be able to apply for all the other taxes online via e filing including VAT.
A value-added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax on the value added to a product, material, or service. The seller pays over to to the government (SARS) the difference between the VAT paid on its purchase and the VAT charged on its sales.
An income tax is a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer. Details vary widely by jurisdiction. Many jurisdictions refer to tax on business entities as companies tax or corporation tax. Partnerships generally are not taxed; rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions thereof. Most jurisdictions exempt locally organized charitable organizations from tax. Income tax generally is computed as the product of a tax rate times taxable income. The tax rate may increase as taxable income increases (referred to as graduated rates).
Tax rates may vary by type or characteristics of the taxpayer. Capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. Taxable income of taxpayers resident in the jurisdiction is generally total income less income producing expenses and other deductions. Generally, only net gain from sale of property, including goods held for sale, is included in income. Income of a corporation's shareholders usually includes distributions of profits from the corporation. Deductions typically include all income producing or business expenses including an allowance for recovery of costs of business assets.
Many jurisdictions allow notional deductions for individuals, and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions. Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are generally subject to significant penalties, which may include jail for individuals or revocation of an entity's legal existence.
In order for you to register for tax you need to fill in a IT77 form, then you need to submit this form to SARS in person with a certified copy of your ID document, letter from the bank to confirm your bank account, and proof of residence, which would normally be a original municipal account, or a certified copy of your lease agreement. 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.
Company income tax return (IT14) - This return is due one year after the company’s financial year end, so of your year end is 28 February 2018, the Company Income Tax return (IT14) would be due at SARS on 28 February 2019, these returns are normally filed via e filing, so it is essential to register for e filing in order to file returns.
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. SARS tend to penalize companies severely if these calculations are wrong, so care must be taken with these returns. These returns are due in August and February if the company’s year end is February. Provisional Tax returns are filed via e filing
Monthly Employer Declaration (EMP201) forms must be submitted at SARS either manually or via e filing by the 7th (or last working day before the 7th) of the following month. So if you paid salaries for November, the PAYE need to be paid over to SARS by the 7th of December, failure to file the return or make the payment in time will result in severe penalties.
Twice a year you need to file an Employer Reconciliation (EMP501), on this return you need to declare how much PAYE, SDL and UIF was deducted and paid over for each employee, during this process the IRP5 certificates are also issued.
Vendor Declaration forms (VAT201) need to be filed normally every second month, and within 25 days after the period ends, or within 30 days if the return is filed via e filing. So if your VAT period is for November and December, that return need to be filied before 31 January.
An accountant is a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.
In many jurisdictions, professional accounting bodies maintain standards of practice and evaluations for professionals. Accountants who have demonstrated competency through their professional associations' certification exams are certified to use titles such as Chartered Accountant, Chartered Certified Accountant or Certified Public Accountant. Such professionals are granted certain responsibilities by statute, such as the ability to certify an organization's financial statements, and may be held liable for professional misconduct. Non-qualified accountants may be employed by a qualified accountant, or may work independently without statutory privileges and obligations.
The general definition of an audit is a planned and documented activity performed by qualified personnel to determine by investigation, examination, or evaluation of objective evidence, the adequacy and compliance with established procedures, or applicable documents, and the effectiveness of implementation. The term may refer to audits in accounting, internal controls, quality management, project management, water management, and energy conservation.
Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. The purpose is then to give an opinion on the adequacy of controls (financial and otherwise) within an environment they audit, to evaluate and improve the effectiveness of risk management, control, and governance processes
There are generally two types of tax payers, personal tax payers and corporate tax payers.
For individual tax payers you need to be registered for personal tax as soon as you earn income e.g. from commission, fees, salary etc. If you earn more than R 250 000 for a full year, or work for two different employers for the year, or if you have additional income for a year for example rental income or interest, or if there are deductions you want to claim, then you need to submit a personal tax return. Most individuals go to a SARS branch which is normally very time consuming, or try and file their returns on e filing, which I easy if you do it right, but a nightmare when you get it wrong, that is why a lot of people opt for a tax practitioner (like us) do do their return for them, and get it right first time.
Corporate Income Tax (CIT) are paid by companies or close corporations and also trusts on their income, these returns (IT14 - company tax return) are filled in with the information retrieved from their annual financial statements that you would be prepared by an accountant, after which SARS would do an assessment to determine the taxable income for the entity and then issue an assessment (IT 34) based on the taxable income multiplied by the various tax rates applicable to entities.
All companies must register on invoice basis, this means that they will be liable for the VAT on the invoices as they issue the invoices, irrespective whether they have received the payments or nor, but they can also claim VAT on their purchases irrespective if the paid the invoice or not. Whereas on the payment basis you only need to account for the output and input VAT as payments are made.
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!
What is PAYE? (Pay as You Earn)
A pay-as-you-earn tax (PAYE) is a withholding tax on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may include withholding the employee portion of insurance contributions or similar social benefit taxes. In most countries, they are determined by employers but subject to government review. PAYE is deducted from each paycheck by the employer and must be remitted promptly to the government. Most countries refer to income tax withholding by other terms, including pay-as-you-go tax.
How do I register for PAYE?
In order for an employer to register for PAYE you need to have the following ready:
You need to take the completed application form with the supporting documents to your local SARS branch, they will take in your application and then issue your number within 21 working days.
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!
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