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VAT
WHAT IS VAT?
VAT (Value-Added Tax) is an indirect tax charged on goods and services. While suppliers add it to the price, it is paid by the final consumer.
HOW DOES VAT WORK?
Standard VAT is 15% and added to most goods/services.
Zero-rated VAT (0%) applies to essentials like basic food and exports.
Exempt items are not subject to VAT at all.
VAT-registered businesses charge VAT on sales (Output VAT) and pay VAT on purchases (Input VAT). Input VAT can be claimed if purchases are used to produce VAT-taxable goods/services.
VAT REGISTRATION REQUIREMENTS
Compulsory Registration: If sales exceed R1 million in the past 12 months.
Voluntary Registration: If sales are over R50,000 and expected to continue.
PROS:
You can claim Input VAT on qualifying purchases.
CONS:
You must increase your prices by the VAT amount and pay that to SARS.
WHEN TO PAY VAT TO SARS:
Category A: Every 2 months - Jan, Mar, May, Jul, Sep, Nov
Category B: Every 2 months - Feb, Apr, Jun, Aug, Oct, Dec
Category C: Monthly
Category D: Bi-annually - Feb & Aug
Category E: Annually at financial year-end
PENALTIES:
10% penalty for late VAT payments
No penalty for late returns, but repeated non-submissions may result in admin penalties based on turnover
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WHAT IS VAT?
VAT (Value-Added Tax) is an indirect tax charged on goods and services. While suppliers add it to the price, it is paid by the final consumer.
HOW DOES VAT WORK?
Standard VAT is 15% and added to most goods/services.
Zero-rated VAT (0%) applies to essentials like basic food and exports.
Exempt items are not subject to VAT at all.
VAT-registered businesses charge VAT on sales (Output VAT) and pay VAT on purchases (Input VAT). Input VAT can be claimed if purchases are used to produce VAT-taxable goods/services.
VAT REGISTRATION REQUIREMENTS
Compulsory Registration: If sales exceed R1 million in the past 12 months.
Voluntary Registration: If sales are over R50,000 and expected to continue.
PROS:
You can claim Input VAT on qualifying purchases.
CONS:
You must increase your prices by the VAT amount and pay that to SARS.
WHEN TO PAY VAT TO SARS:
Category A: Every 2 months - Jan, Mar, May, Jul, Sep, Nov
Category B: Every 2 months - Feb, Apr, Jun, Aug, Oct, Dec
Category C: Monthly
Category D: Bi-annually - Feb & Aug
Category E: Annually at financial year-end
PENALTIES:
10% penalty for late VAT payments
No penalty for late returns, but repeated non-submissions may result in admin penalties based on turnover
EMPLOYEE TAX
WHAT IS EMPLOYEE TAX?
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.
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WHAT IS EMPLOYEE TAX?
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.
PROVISIONAL TAX
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.
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:
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.
There is a 10% penalty for late payments, and interest is charged on any outstanding amounts.
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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.
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:
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.
There is a 10% penalty for late payments, and interest is charged on any outstanding amounts.
INCOME TAX
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.
WHEN IS INCOME TAX DUE?
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.
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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.
WHEN IS INCOME TAX DUE?
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.
SARS ASSESSMENT
HOW TO REQUEST CLARITY?
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?
The ‘Notice of Objection’ form must be submitted within 80 business days from the date of 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.
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HOW TO REQUEST CLARITY?
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?
The ‘Notice of Objection’ form must be submitted within 80 business days from the date of 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.
CAPITAL GAINS TAX
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.
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.
CUSTOM DUTY
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.
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.
AUDITING
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.
BENEFITS
• 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
OVERALL PROCESS
• 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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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.
BENEFITS
• 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
OVERALL PROCESS
• 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.
