“Non-Taxable Income” is term that is most commonly used, but the more correct term is “Exempt Income”. This is income which you receive which you are allowed to exclude from your Gross income and in so doing you do not get taxed on it. Examples include:

• Dividends received from a South African source
• South African interest received by non-resident
• Foreign pensions
• Workmen’s compensation benefits
• Unemployment (UIF) benefits
• Alimony and Maintenance benefits
• Uniform Allowance – provided that the uniform as a condition of employment and clearly distinguishable
• Bona fide scholarships or bursaries granted to assist someone to study at a recognized institution
• Levies received by Body Corporates, club fees by Recreational clubs,
• In addition to this list, some exemptions are partially taxable – terms and conditions apply:
• Ship crews and employment outside SA – when the time spent abroad exceeds and accumulative 183 days and 60 days of which are spent away consecutively + +
• All income must however, be declared to the South African Revenue Services.

This serves as a guide line only so please feel free to ask for more information from our team of professional accountants.

Last February 2013, the National Treasury and SARS started negotiating with the United States Department of the Treasury to introduce an inter-governmental agreement (IGA) with regard to the Foreign Account Tax Compliance Act (FATCA). Wording of a draft IGA has been agreed upon, and will be signed at government level soon. This will open up access to relevant information about our own tax investigations in South Africa.

Once the IGA has been confirmed, South African financial institutions will inform SARS, who will then exchange this information to the US under a legal framework, in accordance with the existing double taxation agreement that exists between the US & South Africa.

SARS has identified, through other international developments that using the automatic exchange of information to identify non-compliant taxpayers using foreign accounts, there can be a way to combat offshore tax evasion.

This brings us to the BRS “business requirement specification” that SARS would like to implement, which will require automatic periodic reporting of specific information from financial institutions, regarding all non-residents, not just US citizens under FATCA. SARS will then be able to share this information, with any of its alliances, on a reciprocal arrangement.

This shows that South Africa is part of leading the way to a global movement of tax transparency and the exchange of tax information, to secure trust and fairness in the international tax system.

Please note that SARS offers a voluntary disclosure program for South African taxpayers who have not yet regularised their position with regards to thier offshore holdings.

Please contact us at PATC if you have any queries or need assistance with your tax responsibilities.

Minister of Finance Pravin Gordhan formally launched the Tax Ombud during the South African budget speech this 7^th of April 2014. The aim of the Tax Ombud is to create an avenue where taxpayer’s legitimate complaints, about SARS service and procedure or admin issues, are addressed.

“The Tax Ombud is an additional and free avenue to deal with complaints by taxpayers that cannot be resolved through SARS’s internal mechanisms. The Tax Ombud’s office draws on comparable institutions in Canada and the United Kingdom”, as mentioned by Minister Pravin Gordhan.

SARS needs to accommodate the taxpayer’s complaints and try to resolve them using all their internal resources. Only then, if SARS can’t resolve the complaint, will the Tax Ombud get involved in investigating a resolution to the complaint.

The first Tax Ombud, retired Judge Bernard Ngoepe said, “The office operates independently of SARS, and also treats with strict confidence the communication between it and the taxpayer,” he added. “Given all these as well as other considerations, the office of the Tax Ombud expects to contribute towards boosting the taxpayers’ confidence in tax administration, resulting, hopefully, in even better tax compliance.”

The Tax Ombud reports to the Minister of Finance on an annual basis at Parliament, where the report is presented by the Minister.

If you have any tax queries or requirements please contact us at PATC.

If your business turnover exceeds R30 million per annum, or is reasonably expected to exceed R30m then you need to submit monthly VAT returns to avoid penalties from SARS.

As per Category C, VAT vendors with a turnover of more than R30 million per annum must submit their returns monthly, submitting 12 VAT returns per annum. However if the turnover of VAT vendors, that were a Category A or B, increases and exceeds R30 million per annum then the vendor needs to notify SARS in writing. If the VAT vendor fails to notify SARS, SARS will raise an interest charge and a 10% late penalty.

Speak to us at Professional Accountants & Tax Consultants. We’ll work closely with you to make the most out of your monthly returns, saving you time and money.

Financial year-end can often be a stressful and is a very busy time for companies, as each department gathers their reports and statements, in order to complete the financial year-end successfully.

In order for a smooth process you need to start early and check that your company has records, reports and statements for the following:

• Bank statements: all business related accounts and make sure they have been reconciled
• Cash control: Record of cash on hand
• Accounts receivable (debtors): Ensure that all payments from clients have been processed by the year-end
• Accounts payable (creditors): Ensure all delivered goods and payments made to the supplier have been captured. You should have a statement from every supplier.
• Accruals and provisions:
  – Accruals should only include amounts which may be charged to the business at a later date, for work done in respect of the current financial year e.g. accounting and audit fees.
  – Provisions should only include amounts which are due by the business at year-end but may not necessarily be paid out in the coming year e.g. leave pay and staff bonuses.
• Control accounts – there are usually two types:
  – Payroll controls
  – VAT controls
• Loans: Interest-bearing, non-interest-bearing and current portion.
• Fixed assets: A register of fixed assets is a statutory requirement for all private companies and close corporations. It is also good practice for trusts and sole proprietors to keep this register.
• Stock take: Physical count of stock, the value of the stock and that cost price is reasonably correct. Consider devaluing or writing-off slow-moving or obsolete stock.
• Expenses: Check that there are 12 entries for all regular monthly expenses. Check that no capital expenditure has been included.

Get in touch with Professional Accountants for assistance in closing the books on your financial year-end.

There are many unskilled and inexperienced youth in South Africa and it is difficult for them to start contributing to the economy without experience. Many employees have been reluctant to hire inexperienced unskilled youth, and contributing to this fear has been the restrictiveness of the labour regulations.

Last year, SARS implemented a new incentive scheme for businesses to employ young inexperienced work seekers, called the Employment Tax Incentive (ETI). It reduces the employers cost, of hiring young workers, through a cost-sharing mechanism with the government. It is in effect since the 1^st of January 2014.

How do I qualify?

An employer qualifies for ETI if the employer is:

• • Registered for employees’ tax (PAYE);
  • Not in the national, provincial or local sphere of government;
  • Not a public entity listed in Schedule 2 or 3 of the Public Finance Management Act (other than those public entities designated by the Minister of Finance  by Notice in the Gazette);
  • Not a municipal entity;
  • Not disqualified by the Minister of Finance due to displacement of an employee or by not meeting such conditions as may be prescribed by the Minister by regulation.

An individual qualifies as an employee if he or she:

• • Has a valid South African ID;
  • Is 18 to 29 years old (please note that the age limit is not applicable if the employee renders services inside a special economic zone (SEZ) to an employer that is operating inside the SEZ, or if the employee is employed by an employer that operates in an industry designated by the Minister of Finance;
  • Is not a domestic worker;
  • Is not a “connected person” to the employer;
  • Was employed by the employer or an associated person to the employer on or after 1 October 2013; and
  • Is not an employee in respect of whom an employer is disqualified  to receive the ETI (i.e. the employee is paid below the minimum  wage applicable to that employer or paid a wage below R2 000 per month if a minimum wage not applicable).

Please note: There is no limit to the number of qualifying employees that an employer can hire.

 How does it work?

An employer must follow these steps, and calculate & claim the incentive on a monthly basis:

• Identify all qualifying employees in respect of that month
• Determine the employment period for each qualifying employee
• Determine each employee’s “monthly remuneration”
• The EMP201 form was amended to include a field for claiming ETI, which can be seen on this SARS link.
•  Calculate the amount of the incentive per qualifying employee as per the table below:

To determine the first or the second 12-month period, only count the months where the employee was qualified. For example, the employee may be qualified during the first three months and not qualified in the fourth and the fifth months. If the employee is qualified in the sixth month, then the sixth month is month is counted as number four, as far as the 12-month period is concerned.

How long is it available for?

The initial end date of 31 December 2016 was extended to 28 February 2019.

This information has been obtained from the SARS website