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What is VAT?
An indirect tax (charged on the producers of goods and services but paid by the final consumer of the goods and services as part of the purchase price) on the consumption of goods and services.
An indirect tax (charged on the producers of goods and services but paid by the final consumer of the goods and services as part of the purchase price) on the consumption of goods and services.
An indirect tax (charged on the producers of goods and services but paid by the final consumer of the goods and services as part of the purchase price) on the consumption of goods and services.
How Does VAT Work?
Standard rated VAT is 15%, which businesses add to the price of goods and services they sell.
Zero-rated is when 0% is added to the price of goods and services (Usually for essential goods and services) (e.g., exports, basic foodstuffs).
There is also an instance where goods or services are exempt, meaning that no VAT is charged.
Businesses registered for VAT must charge VAT on their sales (also known as Output VAT) and pay VAT on their purchases (also known as Input VAT). Input VAT can be claimed if the purchases are used to produce goods and services where VAT will be levied.
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Standard rated VAT is 15%, which businesses add to the price of goods and services they sell.
Zero-rated is when 0% is added to the price of goods and services (Usually for essential goods and services) (e.g., exports, basic foodstuffs).
There is also an instance where goods or services are exempt, meaning that no VAT is charged.
Businesses registered for VAT must charge VAT on their sales (also known as Output VAT) and pay VAT on their purchases (also known as Input VAT). Input VAT can be claimed if the purchases are used to produce goods and services where VAT will be levied.
Standard rated VAT is 15%, which businesses add to the price of goods and services they sell.
Zero-rated is when 0% is added to the price of goods and services (Usually for essential goods and services) (e.g., exports, basic foodstuffs).
There is also an instance where goods or services are exempt, meaning that no VAT is charged.
Businesses registered for VAT must charge VAT on their sales (also known as Output VAT) and pay VAT on their purchases (also known as Input VAT). Input VAT can be claimed if the purchases are used to produce goods and services where VAT will be levied.
Requirements To Register For VAT
If the business’ sales for the previous 12 months exceed R1 million, that business is required to register (also known as a compulsory registration).
If the business’ sales for the previous 12 months are more than R50 000 but are less than R1 million, that business will be allowed to register if they can provide proof that their sales for the next 12 months are expected to exceed R50 000 (also known as voluntary registration).
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If the business’ sales for the previous 12 months exceed R1 million, that business is required to register (also known as a compulsory registration).
If the business’ sales for the previous 12 months are more than R50 000 but are less than R1 million, that business will be allowed to register if they can provide proof that their sales for the next 12 months are expected to exceed R50 000 (also known as voluntary registration).
If the business’ sales for the previous 12 months exceed R1 million, that business is required to register (also known as a compulsory registration).
If the business’ sales for the previous 12 months are more than R50 000 but are less than R1 million, that business will be allowed to register if they can provide proof that their sales for the next 12 months are expected to exceed R50 000 (also known as voluntary registration).
Pros and Cons of Registering for VAT
Pros:
You can claim the input VAT you pay on purchases, if those purchases will be used to produce supplies (goods and services) that VAT is levied on.
Cons:
The price of your goods and services will have to be increased by the VAT amount and that increase will have to be paid over to SARS
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Pros:
You can claim the input VAT you pay on purchases, if those purchases will be used to produce supplies (goods and services) that VAT is levied on.
Cons:
The price of your goods and services will have to be increased by the VAT amount and that increase will have to be paid over to SARS
Pros:
You can claim the input VAT you pay on purchases, if those purchases will be used to produce supplies (goods and services) that VAT is levied on.
Cons:
The price of your goods and services will have to be increased by the VAT amount and that increase will have to be paid over to SARS
When to Pay Over VAT to SARS
Category A: Must be paid over every 2 months – January, March, May, July, September, November
Category B: Must be paid over every 2 months – February, April, June, August, October, December
Category C: Must be paid over every month
Category D: Must be paid over bi-annually – February & August
Category E: Must be paid over yearly on the end of the year of assessment of the vendor
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Category A: Must be paid over every 2 months – January, March, May, July, September, November
Category B: Must be paid over every 2 months – February, April, June, August, October, December
Category C: Must be paid over every month
Category D: Must be paid over bi-annually – February & August
Category E: Must be paid over yearly on the end of the year of assessment of the vendor
Category A: Must be paid over every 2 months – January, March, May, July, September, November
Category B: Must be paid over every 2 months – February, April, June, August, October, December
Category C: Must be paid over every month
Category D: Must be paid over bi-annually – February & August
Category E: Must be paid over yearly on the end of the year of assessment of the vendor
Penalties Related to VAT
There is a 10% penalty for late payment of VAT
There is currently no penalty for late submission of a VAT return
However, SARS can impose administrative non-compliance penalties for repeated non-submissions, depending on turnover.
There is a 10% penalty for late payment of VAT
There is currently no penalty for late submission of a VAT return
However, SARS can impose administrative non-compliance penalties for repeated non-submissions, depending on turnover.
There is a 10% penalty for late payment of VAT
There is currently no penalty for late submission of a VAT return
However, SARS can impose administrative non-compliance penalties for repeated non-submissions, depending on turnover.
What is Employees Tax?
The tax that an employer deducts from the salary or wage of their employees.
The tax that an employer deducts from the salary or wage of their employees.
Who is Responsible For Payment To SARS?
It is deducted from employees’ salaries or wages by the employer before they receive them, and then the employer is responsible for paying it over to SARS.
It is deducted from employees’ salaries or wages by the employer before they receive them, and then the employer is responsible for paying it over to SARS.
It is deducted from employees’ salaries or wages by the employer before they receive them, and then the employer is responsible for paying it over to SARS.
What is Provisional Tax?
Provisional tax isn't a separate form of tax, but rather a way of paying your tax in advance, through estimation of your final normal tax payable for the year.
Consists of two payments:
The first payment must be made within the first 6 months of the beginning of the financial year.
The second payment must be made no later than the last day of the financial year.
There is an optional third payment if both first and second payments of provisional tax did not cover the total tax due, and this third payment must be made within the first 6 months of the next financial year.
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Provisional tax isn't a separate form of tax, but rather a way of paying your tax in advance, through estimation of your final normal tax payable for the year.
Consists of two payments:
The first payment must be made within the first 6 months of the beginning of the financial year.
The second payment must be made no later than the last day of the financial year.
There is an optional third payment if both first and second payments of provisional tax did not cover the total tax due, and this third payment must be made within the first 6 months of the next financial year.
Provisional tax isn't a separate form of tax, but rather a way of paying your tax in advance, through estimation of your final normal tax payable for the year.
Consists of two payments:
The first payment must be made within the first 6 months of the beginning of the financial year.
The second payment must be made no later than the last day of the financial year.
There is an optional third payment if both first and second payments of provisional tax did not cover the total tax due, and this third payment must be made within the first 6 months of the next financial year.
Pros and Cons of Provisional Tax
Pros:
Since it is not a separate tax, it reduces the overall tax the business owes. It acts as a pre-payment of tax.
Cons:
There is a 10% penalty for late payments, and interest is charged on any outstanding amounts.
Underestimation of your normal tax payable for the year has a 20% penalty. The 20% penalty applies when a taxpayer’s estimate of taxable income is less than 90% of the final actual taxable income.
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Pros:
Since it is not a separate tax, it reduces the overall tax the business owes. It acts as a pre-payment of tax.
Cons:
There is a 10% penalty for late payments, and interest is charged on any outstanding amounts.
Underestimation of your normal tax payable for the year has a 20% penalty. The 20% penalty applies when a taxpayer’s estimate of taxable income is less than 90% of the final actual taxable income.
What is Income Tax?
Is the tax levied on the profits of a company after having deducted the expanses on the revenue of the company.
Is the tax levied on the profits of a company after having deducted the expanses on the revenue of the company.
When is Income Tax Due?
It is paid in the form of provisional tax, which is discussed in the section provisional tax.
It is paid in the form of provisional tax, which is discussed in the section provisional tax.
Penalties Related To Income Tax
There is a 10% penalty for late payment.
There is a 10% penalty for late payment.
How to Request Clarity on a SARS Assessment
The person must submit a ‘Request for Reason’ in a letter format.
The ‘Request for Reason’ is a formal process where an individual or entity asks for an explanation or justification for a decision or action that has been taken against them by SARS.
The ‘Request for Reason’ must be submitted within 30days from the day of assessment (30 days from when the assessment has been received from SARS).
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The person must submit a ‘Request for Reason’ in a letter format.
The ‘Request for Reason’ is a formal process where an individual or entity asks for an explanation or justification for a decision or action that has been taken against them by SARS.
The ‘Request for Reason’ must be submitted within 30days from the day of assessment (30 days from when the assessment has been received from SARS).
How To Dispute a SARS Assessment
A ‘Notice of Objection’ dispute form must be completed and submitted with SARS in order to dispute any assessment or part of any assessment issued by SARS.
The ‘Notice of Objection’ form must be submitted within 80 business days from the date of assessment.
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A ‘Notice of Objection’ dispute form must be completed and submitted with SARS in order to dispute any assessment or part of any assessment issued by SARS.
The ‘Notice of Objection’ form must be submitted within 80 business days from the date of assessment.
What is Capital Gains Tax and How Does it Work?
The tax that is levied on the sale of assets.
For individuals, only 40% of the capital gains (Selling price – cost) are taxed with the rest of the income and not separately
For businesses, 80% of the capital gains are taxed with the rest of the income.
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The tax that is levied on the sale of assets.
For individuals, only 40% of the capital gains (Selling price – cost) are taxed with the rest of the income and not separately
For businesses, 80% of the capital gains are taxed with the rest of the income.
What is Donations Tax?
Tax that is levied on any property (money or assets) that is legally given to another person (both individuals and organisations).
For total donations that are below R30 million, a rate of 20% is levied.
For donations that are above R30 million, a rate of 25% is levied.
A donation made to a spouse; an approved public benefit organisation; any sphere of government is exempt from donations tax
For organisations, donations valued at R10 00 or less are exempt.
For individuals, the first R100 000 of property donated each year is exempt.
The person who makes the donation is liable for donations tax.
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Tax that is levied on any property (money or assets) that is legally given to another person (both individuals and organisations).
For total donations that are below R30 million, a rate of 20% is levied.
For donations that are above R30 million, a rate of 25% is levied.
A donation made to a spouse; an approved public benefit organisation; any sphere of government is exempt from donations tax
For organisations, donations valued at R10 00 or less are exempt.
For individuals, the first R100 000 of property donated each year is exempt.
The person who makes the donation is liable for donations tax.
What is Customs Duties?
A tax levied on the purchase of certain imported goods.
They include standard custom duties, excise duties (specific or ad valorem), anti-dumping duties, safeguard duties, environmental levies, and VAT.
A tax levied on the purchase of certain imported goods.
They include standard custom duties, excise duties (specific or ad valorem), anti-dumping duties, safeguard duties, environmental levies, and VAT.
What is Bookkeeping?
The process of recording all transactions within the organisation, small or big, income or expenditure.
It is important in helping the organisation generate its financial statements and well as plan budgets accurately.
Bookkeeping simplifies all enquiries from authorities in regard to the company’s spending.
For a proper bookkeeping record the date, the amount, the name of the good or service purchased/ sold, and the copy of the receipt/ invoice are essential.
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The process of recording all transactions within the organisation, small or big, income or expenditure.
It is important in helping the organisation generate its financial statements and well as plan budgets accurately.
Bookkeeping simplifies all enquiries from authorities in regard to the company’s spending.
For a proper bookkeeping record the date, the amount, the name of the good or service purchased/ sold, and the copy of the receipt/ invoice are essential.
When is a Company Required to be Audited?
A public company (a company listed on a stock/security exchange) is required to be audited regardless of its size.
For a private company, there are three categories:
Companies with a ‘Public Interest Score’ of 350+ are required to be audited.
Companies with a 'Public Interest Score’ of 100+ but >350 are only required to get a review of their financial statements.
Companies with a ‘Public Interest Score’ of >100, are not required to get a review or an audit of their financial statements.
Public Interest Score is calculated as follows:
1 point for the average number of shareholders for the year (both ordinary and special shareholders are considered).
1 point for every R1 million in profits.
1 point for every R1 million is third-party liabilities (Excludes debts owed to suppliers and shareholders of the company)
1 point for the average number of employees for the year.
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A public company (a company listed on a stock/security exchange) is required to be audited regardless of its size.
For a private company, there are three categories:
Companies with a ‘Public Interest Score’ of 350+ are required to be audited.
Companies with a 'Public Interest Score’ of 100+ but >350 are only required to get a review of their financial statements.
Companies with a ‘Public Interest Score’ of >100, are not required to get a review or an audit of their financial statements.
Public Interest Score is calculated as follows:
1 point for the average number of shareholders for the year (both ordinary and special shareholders are considered).
1 point for every R1 million in profits.
1 point for every R1 million is third-party liabilities (Excludes debts owed to suppliers and shareholders of the company)
1 point for the average number of employees for the year.
What is the Benefit of Being Audited?
It enhances the accuracy, reliability and transparency of the organisation’s financial statements by reducing the risk of error, misstatements and discrepancies in the financial statements.
It assists in making sound business decisions.
It can help enhance the controls put in place to safeguards the organisation.
It also assists in building trust between the organisation and its stakeholders
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It enhances the accuracy, reliability and transparency of the organisation’s financial statements by reducing the risk of error, misstatements and discrepancies in the financial statements.
It assists in making sound business decisions.
It can help enhance the controls put in place to safeguards the organisation.
It also assists in building trust between the organisation and its stakeholders
What is the Overall Process of Auditing?
It involves gathering evidence through various means to ensure that the financial statements of the organisation are free from error, and that they are prepared in accordance with the relevant accounting standards.
It also involves testing the controls that are in place to ensure that they operate as they should, and that those controls can detect, prevent and correct any errors that may occur.
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It involves gathering evidence through various means to ensure that the financial statements of the organisation are free from error, and that they are prepared in accordance with the relevant accounting standards.
It also involves testing the controls that are in place to ensure that they operate as they should, and that those controls can detect, prevent and correct any errors that may occur.
