Get it wrong and you could face massive penalties!
...of up to 200%
Find out what documents SARS wants you to keep!
By LAW, companies (taxpayers) are required to keep certain tax records for 5 years.
If you don’t know which documents and records SARS requires you to keep, then you will find yourself facing penalties.
A single item of which you don't have proof will cause the SARS to doubt the validity of all your other deductions claimed or disclosures of income received. This could lead to additional assessments and additional tax of up to 200%.
This can be a little bit daunting, but with the Practical Tax Loose Leaf by your side accurate record keeping is easy:
The ABC of tax record keeping for maximum savings from SARS
You may choose your own system of record keeping that suits the purpose and nature of your business, but your records must always establish your income and expenses. You need to keep permanent books of account as well as any other information to support these records, such as cheque stubs, paid accounts, and bank statements.
The Income Tax Act and the Value-Added Tax Act specify certain records that you are required to keep.
These records include:
- cash books
- cheque books
- bank statements
- deposit slips
- paid cheques
- stock lists and
- other books of account
** Recent changes to the Act now include any data created by means of a computer, including data in the electronic form in which it was originally created or in which it is stored for back-up purposes.
The Practical Tax Loose Leaf will tell you exactly what recors to keep and how long to keep them for.
Start your 14 day risk free trial to the Practical Tax Loose Leaf Service to get a full breakdown on everything you need to know about record keeping:
How to start saving time and money today!
How long must you keep your records?
Do you have to keep records in a certain way?
How to hang on to your “get out of jail free” card
Documents you should never “bin”
Don’t give away more CGT than you have to!
Why you should never destroy records too early
The Companies Act proposes changing the period you need to keep tax records for from 5 to 15 years!!
How many companies have a bookkeeper for that long, and therefore have all their records in order for that long?
Sign up to the Practical Tax Loose Leaf Service and we will send you a full breakdown of the new Companies Act as soon as it is implemented. Regular updates will be sent to you, to ensure you are always on top of the latest tax law changes.
For more details on how the updates work read on.
But that's not all...
If SARS comes knocking at your door, are you 100% confident that all your books are in order?
When it comes to tax you need to make sure you know your rights and ensure you never pay too much tax or end up with penalties of as much as 200%. Just relying on your accountant or tax consultant could end up costing you hundreds of thousands of rands.
Find out how to avoid tax penalties of up to 200% today
It's time to start making tax laws work for you!
I’ll show you how to tackle, salary structuring, capital gains tax (CGT), medical aid deductions, travel allowances and much more. I’ll give you the tips, tools and simple explanations you need to understand exactly how to use the Tax Laws to your advantage.
Know your rights! And discover exactly what you should be checking every month to steer clear of serious tax penalties. That’s why Fleet Street Publications has created the Practical Tax Loose Leaf Service for you.
This loose leaf service provides practical tax advice in plain English (with no legalese), with step-by-step instructions, checklists and many, immediately understandable examples to make sure you know your rights, never pay too much tax or end up with penalties of as much as 200%.
Top SA experts write for the Practical Tax Loose Leaf Service
Experienced tax specialists give you hands-on advice on the right tax strategy for you to use to take the hassle out of any tax situation. In fact, one of our editors was a former SARS official for 16 years, so who better to give you insight into the inner working of SARS?
How will the Practical Tax Loose Leaf help you and your business?
See for yourself how this handbook tackles your tax problems, giving you practical solutions that you will never find in other jargon-filled, technical publications on the market. And you can order it today for a free 14-day trial.
What difference is this service going to make to your every day taxation?
- You’ll have access to tips, checklists and step-by-step instructions, to save you time and money when you do your taxes
- You’ll be able to take advantage of our Tax Helpdesk, where you can email me any quick tax queries and receive an answer within 72 hours
- You’ll always be 100% up-to-date with important changes in legislation via updates sent to you every 8 weeks and our weekly free email newsletter
- You’ll have a team of tax experts on your shelf
You will definitely find it worthwhile, even if you’re convinced of the abilities of your tax consultant. It’s simpler, faster and cheaper to look something up than to wait for your tax consultant or SARS to call you back. Of course, during these 14 days you can also check how good your tax consultant really is…
Prof Marius Maritz
Editor-in-Chief - Practical Tax Loose Leaf Service
PS: When you reply you’ll receive an invaluable free copy of Take on SARS and Win! worth R99.
PPS: Place your order within the next two weeks and receive the How to Survive a SARS Audit booklet and CD containing 22 useful checklists. Be empowered to look at your business through the critical eyes of a SARS auditor. Know your rights and prepare your business.
Practical Tax Loose Leaf: Sample extract
Here’s your chance to take the hassle out of tax, audit-proof your business and make the Receiver your friend!
Working from home: The best tax-deductible ways
The tax-deductible possibilities for offices at home have been severely restricted. But for smart people, there is still some elbowroom. You can deduct the costs of all office supplies, from pencils to wastebaskets and office furniture.
If you’ve set up a business and operate from home, the portion you use for business purposes is tax deductible. It’s also possible to rent a room from parents or siblings. This way the money stays in the family and the expenses are approved 100%.
Protect your rights when SARS comes knocking at your door!
Don’t let SARS bully you – you have rights! Get off the back foot and exercise these three rights when SARS audits you:
- SARS must give you at least 21 days’ notice. If you need more time, request an extension.
- You’re entitled to request reasons for any adjustments SARS may make, so insist on getting the answers you may need!
- SARS has no right to invade your privacy in the name of an audit. SARS can't search personal records and your home may not be searched by SARS without a warrant.
How to get a little “free” advertising
Advertising expenditure is generally deductible, provided that it’s incurred in the production of income and is not of a capital nature. For instance, a TV ad to be screened over a prolonged period of time would not be deductible as it would be viewed as being of a capital nature. However, your ad could be deductible where it is only screened over a short period.
How to make the most of your travel claims
Do you know what travel expenses you can and cannot claim? Do you know when or when not to use a logbook? Find out how to make the most of your travel expenses.
Save R23 863.20 by keeping an accurate logbook
Maintaining an accurate logbook is a tedious affair but the benefit of additional tax savings may make it worthwhile.
An accurate logbook means you can base your claim for travel expenses for business and private use on the actual distances travelled. You may also be able to reduce the taxable benefit of the company vehicle used by you. No logbook puts you at the mercy of the provisions of the Income Tax Act, that can in some cases be extremely costly.
Our practical example below shows you how you can easily save R23 863.20 by keeping an accurate logbook.
Who can benefit from an accurate logbook?
• Sole proprietors, commission earners
• Employees who receive travel allowances
• Employees, directors, members, etc. using a company owned vehicle
Vincent, a commission earner, is entitled to claim his actual motor vehicle expenses as a deduction from business income received. The cost price of the vehicle used was R300 000. The total motor vehicle expenses for the year are the following:
Motor vehicle expenses
Fuel and oil R9 554
Insurance R9 780
Maintenance R3 564
Lease payments R90 000
Total R113 018
Vincent is not, however, entitled to deduct the total cost incurred. An adjustment must be made for costs attributable to the private use of his motor vehicle. The quantum of this adjustment can be determined in two ways:
1. Where accurate records of private and business distances travelled were not kept:
Private usage is deemed to be equivalent to the first 18 000km’s (limited to 32 000km for the year). The allowable deduction is thus limited to:
Total expenses R113 018
Deemed business use of vehicle
R113 018/32 000km x 14 000km
Allowable deduction R49 445.38
2. Where accurate records of private and business distances travelled were kept:
Private usage is calculated on the actual business distances travelled in relation to the total mileage.
Summary of information recorded in an accurate logbook
Private km 10 983 km
Business km 20 276 km
Total distance 31 259 km
Allowable deduction where an accurate logbook is kept
Total expenses R113 018
Deemed business use of vehicle
113 018/31 259km x 20 276km
Allowable deduction R73 308.58
"Every businessman’s worst tax nightmare" – But here’s how to get rid of your Vat problems once and for all...
Your comprehensive guide to Value-Added Tax for managers and business owners
Claiming Vat on second hand or repossessed goods.
An important provision to the Vat Act concerns the claiming of Vat on second-hand or repossessed goods.
You must complete a Vat264 form, to assist you to comply with the provisions pertaining to the acquisition of second hand goods (Section 20(8) of the Vat Act, 1991).
Since 1 May 2004, all vendors claiming an input tax credit for the acquisition of second-hand goods or repossessed goods must complete the Vat264 form and retain this form for five years after completion of the transaction (as prescribed by Section 55 of the Vat Act).
Did you know you can download the Vat264 form from SARS website (www.sars.gov.za) under Vat/Vat Forms?
Throughout the Loose Leaf, we will highlight some of the most important websites and where exactly you can download valuable material you can use right away.
Save by informing SARS of any change in your Vat status
You are obliged to inform the SARS in writing of any change:
- In the name, address, constitution or nature of your principal enterprise;
- In the name of and address at which your enterprise is carried on;
- Where your turnover exceeds R30 million per annum;
- Should your turnover as a vendor on the payments basis (page V 01/017 of the Practical Tax Loose Leaf) exceed R2.5 million per annum? This payments basis is not applicable to trusts,CCs and companies;
- In the composition of the membership of your partnership or joint venture. You are not required to notify the SARS of any change in the share - holding of your company (Section 25) and in the appointment or resignation of a representative vendor.
You have to inform the SARS within21 days of such a change. Failure to notify SARS of any of the above changes is an offence, and if found guilty you could be fined or imprisoned for a period not exceeding 24 months (Section 58).
You must submit monthly Vat returns once your turnover exceeds R30 million or is expected to exceed that amount. Do not wait until SARS changes your status or sends you a monthly Vat return. SARS may hold you liable for penalties if you fail to do so. SARS has issued many assessments in excess of R1 million to medium-sized companies with a turnover greater than R30 million in cases where they failed to submit monthly Vat returns (Section 25 (b).
Are subscriptions subject to Vat?
Are subscriptions paid by members of a country club subjected to Vat? The club is registered as a Section 21.
Section 21 (not for profit organisations) are not obliged to register for Vat for the income collected to defray costs incurred for the common cause (levies etc). They are obliged to register for activities generating income in excess of R1 million where the activity is deemed to be “carrying on an enterprise”.
If income from “an enterprise” is less than R1 million the registration is voluntary. If the entity is not registered as a vendor then input tax will not be claimable. If the entity you refer to is potentially involved in an “Enterprise” activity where turnover exceeds R1 million. For example, if the entity had a bar and a restaurant, it would then be obliged to register and all revenue would be subject to Vat and in turn input tax will be claimable by the entity.
Working from home? The 7 little known deductible expenses
Many entrepreneurs run their businesses from home as it’s convenient and cost effective. You can deduct certain expenses related to your home office, but a number of things need to be considered from a tax point of view.
Section 23 (b) provides a number of negative and positive tests you need to apply to your various expenses.
Once you’ve determined that your expense is positive, and therefore deductible, you need to determine between direct and indirect expenses. You can claim all of your direct expenses, but only a portion of your indirect expenses.
What about wages to your domestic worker?
What SARS says: A domestic worker receives a salary for performance of her duties in your complete household. The salary is therefore not a deductible expense.
How ‘Tim the Toolman’ reduces taxes
You may deduct the cost of repairs to the extent that repairs were actually incurred during the year of assessment. Make sure the repairs relate to:
• Repairs to property occupied for the purposes of trade
• Expenditure on treatment against attack from beetles of any timber forming part of such property
• The repair of machinery, implements, utensils and other articles employed for purposes of trade
For a full checklist of repairs that qualify as deductions see page C 04/025 of the Practical Tax Loose Leaf.
Revamp your home office and save R23 200!
The income and capital gains consequences of effecting improvements to your home office are complex and often overlooked. Save yourself thousands by legally deducting the cost of improvements and applying the correct tax treatment.
Take the situation where the close corporation through which you conduct your business is home based. You charge the close corporation a monthly rental for the use of a portion of your house as business premises. The business grows and to accommodate the expansion, you improve the office, by building on an extra room.
Is the cost of improvement deductible and who can deduct it? Is the improvement a taxable benefit to any of the parties? What are the capital gains tax consequences?
We delve deeper into the income and capital gains tax consequences of leasehold improvements and explore the pros and cons of the various courses of action available to you.
For example, you build an extra room on your house for R80 000 to be used as an office. In terms of the written lease agreement with your close corporation it is must effect improvements to the premises to the value of R80 000. If the duration of the lease agreement is two years, the CC can deduct the cost of the leasehold improvements over two years i.e. R40 000 per annum. The CC will save R23 200 in tax on the deduction claimed over two years.
Avoid the CGT tax trap in just 30 minutes!
What is capital gains tax and how does it affect you? We tell you all the information you need to now to avoid the traps...
Avoid the CGT tax trap in just 30 minutes!
What is CGT?
The CGT monster was set loose on 1 October 2001, introducing a complex burden on taxpayers.
CGT is the tax you pay when you sell an asset. The tax is calculated on the amount by which the proceeds from the sale exceed the base cost of the asset.
We will explain the specific inclusion rates that apply to individuals and companies and how to work out your base cost. If you get this wrong, you will pay more than you need to as the base cost also includes improvements you may have made to the asset, and many other costs related to the asset. Find the full list of the main costs in the Practical Tax Loose Leaf, as well as the full list of assets that are EXCLUDED from CGT.
We will also include a feature on the special dispensation allowed to small business owners when it comes to CGT. This can be quite substantial in a lot of cases and we will take you through the various requirements you need to meet to qualify.
How will capital gains tax affect small businesses?
If you're an owner of small businesses, you have been given a special dispensation when you sell your businesses to retire (Paragraph 57 of the Eighth Schedule). The purpose is to provide relief to small business owners who have invested their resources in their businesses to build up retirement capital. It doesn't matter whether the small business is held directly or whether it is a company, close corporation or partnership.
SARS disregards the capital gain or loss in the business under the following conditions:
- The market value of the assets of the business does not exceed R5 million
- You hold at least 10 % of the share capital
- You have been substantially involved in the operations of the business
- You have held ownership or shares for a continuous period of at least five years
- You are at least 55 years or the disposal is because of ill health, other infirmity, superannuation (retire from service on a pension) or death
- Your estate receives the benefit in the event of your death
- Your total exemption under this dispensation is limited and may not exceed R500 000 in your lifetime. The dispensation is cumulative and not for each business or asset disposed of
Do not attempt to claim more than the R500 000 to which you are entitled. SARS maintains records of exemptions already allowed and may judge apparent transgressions harshly.
• All capital gains from the sale of your businesses must be realised within two years from the date of the first disposal.
Remember: when selling more than one business, ensure the total market value does not exceed R5 million, otherwise it won’t be disregarded.
Know the law on avoiding tax: You are now presumed GUILTY
SARS has been dealt a better hand in dealing with you if you try to avoid tax. SARS knows where it stands. The question is: do you?
Do you plan on obtaining an “innocent” tax benefit? If your main or only reason to enter into any arrangement is to receive a tax benefit, SARS will brand you guilty of avoiding tax. The Revenue Laws Second Amendment has been enacted, and, yes, believe it or not, this is exactly what it proposes.
And guess who has to prove their innocence… YOU!
Here's another situation where SARS has the upper hand.
If there is a dispute or legal proceeding and SARS thinks you have tried to avoid tax, the onus shifts to you. That's right – you will have to prove that obtaining a tax benefit was not your only or main reason for entering into the arrangement. Your affairs will be closely scrutinised. Your promise that you never intended to avoid paying tax won't be enough!
For example, you want to introduce a company car scheme by means of a salary sacrifice arrangement. You will have to prove, that the salary sacrifice arrangement was not entered into for the sole or main purpose of obtaining a tax benefit for your employees.
Remember: When you enter into ANY arrangement where there is a tax benefit, you must record (minutes of meetings, email and other communications) your motivations and purposes. SARS may ca to justify your actions!
If your main or only reason for entering into an arrangement is to obtain a tax benefit… don't do it!!!
Follow the link and order your copy of the Practical Tax Loose Leaf and find more reasons why staying legal is best
What else you’ll discover in the Practical Tax Loose Leaf
- Hassle-free tax advice: From bookkeeping to the annual statement of accounts
- Expenses: How to obtain the approval of all entertainment expenses as business expenses
- Depreciation: How to achieve the highest possible tax savings with depreciation
- Corporate and Personal Tax: How to balance corporate and personal tax burdens in the most tax efficient way
- CGT: All the assets which are excluded from capital gains tax
- Office expenses: How to make as many things tax deductible as possible
- Directors’ tax and PAYE: All the best tax savings tips
- Foreign tax: How to keep a foreign presence without paying foreign tax
- Company car vs travel allowance: different scenarios, very different outcomes
- The best tax avoidance methods for estate planning
- In each update: The most important new judgments and administration decisions in brief and what they mean to you and your business
- Information on tax tables, banking, exchange controls, insurance, invoicing, immovable property, taxation of foreign operations and much more…
All tips, recommendations and information in the Practical Tax Loose Leaf are 100% legal, and checked by 3 independent consultants,
In each case you will receive:
- practical advice explained in simple English
- step-by-step instructions
- Check lists with which you can test if you have forgotten anything
- Proven sample formulations for contracts and letters
- Real-life case studies
- Fully referenced and justified examples
Arm yourself with the ammunition to survive your SARS audit:
* 22 checklists to assess your risk, 13 items SARS will check
* 4 expenses SARS will target
* 11 questions SARS will ask you
* What to do when SARS issues an assessment
The How to Survive a Tax Audit: Checklists CD will help you know:
* What documents you must keep
* The risk areas on your balance sheet
* How to minimise your payroll risk
* The general checks in a Vat audit
* What questions to ask when disputing an assessment
About the Authors
Prof Marius Maritz
Prof. Marius Maritz completed his MA (Finance) at the University of Alabama, USA, in record time. He was also accepted by the Harvard University (USA) Executive Corporate Financial Management Programme, and successfully completed this course. More recently, as a newly accepted member of the South African Institute of Tax Practitioners (SAIT) he has received the accolade of Master Tax Practitioner.
Prof. Maritz is well-qualified to tackle taxation. He has served as an Associate Professor in the fields of Specialisation in Strategic Financial Management, Financial Management and Taxation at the UNISA Graduate School of Business Leadership. Here, he was also involved in the development of executive and masters level programmes.
Prof Maritz has served on the Board of Directors of a number of companies, thanks to his specialisation in the area of Financial Management. He has also consulted to a number of corporations, so he has extensive hands-on experience.
Today, he is the chairman of Certified Master Auditors (CMA) Incorporated, www.cmaauditors.co.za.
With more than a decade of experience, Ettiene is a specialist in taxation and the interpretation and application of tax laws. Ettiene is a partner at Financial Tax & Remuneration Services, (FTR Services). Ettiene holds membership of the Institute of Directors, South African Institute of Professional Accountants and the Association of Certified Fraud Examiners. He is Chairman – Tax Technical Committee of South African Institute of Professional Accountants.
Antonie is senior partner of the tax advisory- service.com (a company he founded) and a former SARS official with 17 years of experience at SARS. Who better to get your affairs in order with SARS?
Peter is an independent advocate. He has a Master’s degree in tax and is currently working on a Doctoral thesis in taxation. He has almost 20 years experience in tax and estate planning. Peter specialises in tax research, structuring and litigation.
Andre van Staden
Andre has a masters in tax law and is a specialist with 9 years of experience on a wide variety of taxation matters, including correct remuneration structuring and complete payroll solutions to achieve sound corporate governance and legislative compliance.
Anthony van Zantwijk
Anthony is a specialist in intellectual property commercialisation. He holds a LLM (tax) (Wits); is a partner at Sibanda & Zantwijk and a fellow of the Institute of Intellectual Property Law. Anthony consults to the treasury and SARS on the taxation of IP.
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By ordering your copy of Practical Tax Loose Leaf today:
– You will learn how to avoid excessive tax burdens.
– Receive 100% legal tips, recommendations and information.
– Get the expertise of three independent consultants.
– In each section you will receive:
• Practical advice in plain language
• Step-by-step instructions
• Checklists to make sure you haven’t forgotten anything
• Proven sample formulations for contracts, letters to SARS etc.
• Many, immediately understandable examples
– Your Loose Leaf will always be 100% up-to-date. You’ll receive the most recent information with updates and supplements delivered to you regularly, plus additional information that would benefit your business.
– Additional FREE services:
- Tax helpdesk: We will answer any quick tax questions by email. Available to all paid-up subscribers.
- Unlimited permission to copy all sample forms and contracts as long as you have purchased the Loose Leaf
- Valuable weekly tax e-letter answering pertinent questions and covering key changes in the tax world
- Online access to past updates
– FREE Gift: “Take on SARS and Win!”
In this ground-breaking booklet you’ll find:
- The benefits of Appropriate Dispute Resolution (ADR)
- How to object to an assessment by SARS
- What to do if your objection gets disallowed
- When SARS may/may not settle your dispute
- The regulation of ADR
– Fast Reply BONUS gift: How to Survive a SARS Audit and the accompanying CD containing 22 useful checklists
Are you ready for your SARS audit? Are you 100% sure about that? Arm yourself with ammunition like this to survive your SARS audit:
- 22 checklists to assess your risk
- 13 items SARS will check about your assets
- 4 expenses SARS will target during the audit
- 11 questions you’ll be asked about your cash flow statement
- What to do when an assessment is issued
– You only pay for the Practical Tax Loose Leaf once you receive it. We’re so sure that you’re going to benefit from the Loose Leaf that if you’re not happy, simply return it within 14 days of receipt, and we’ll forget about the bill.