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How to Survive The SARS Season

Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR, offers a simple guide to employer tax filing season.

Madelein Taljaard

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If you’re experiencing symptoms like high fever, dry coughs, chills and shivers, muscle aches and difficult breathing at this time of the year, you’ve probably caught the SARS virus. This epidemic strikes twice a year during the employer tax filing season of April/May and September/October.

Related: Filing Your Annual Tax Return

But not to worry – unlike bird flu, this condition is easily remedied by keeping your paperwork in order, meeting the submission deadlines, and following tax regulations. Here’s what you need to know to survive SARS filing season.

If you employ people, SARS is waiting to hear from you

Between 1 April and 29 May this year, all employers must submit an annual reconciliation of taxes deducted from employees for the 2015 tax year. If you miss this deadline or fail to submit accurate and complete data, you will be penalised heavily.

What are employee taxes?

Pay As You Earn (PAYE) – personal income tax that employers must withhold from employees’ salaries or wages.

Unemployment Insurance Fund (UIF) contributions – 2% of an employee’s salary or wage contributed 50/50 by employers and employees. This fund provides an income to employees who are temporarily unemployed due to illness, maternity leave, or dismissal.

Skills Development Levy (SDL) – 1% of each employee’s salary or wage contributed by the employer towards a fund that gives employers incentives to invest in training, skills development and learnerships.

When did the 2015 financial year start and end?

The South African tax year runs from 1 March to 28 February.

What are my responsibilities as an employer?

As soon as you employ someone and pay them a salary or wage, you must deduct a 1% UIF contribution from their gross earnings and match the amount from the business’s funds. If you pay someone commission only, you don’t need to deduct UIF.

If your total salary and wage expense for a year is more than R500 000, you also need to make the 1% SDL contribution out of your pocket. Then you need to calculate and deduct PAYE for each employee who earns more than R73 650 a year (2015/6 tax year).

By the seventh day of each month, you must pay the UIF, SDL and PAYE contributions for the previous month across to SARS. The payment must be accompanied by a breakdown of the amounts you calculated and has to be submitted online at www.sarsefiling.co.za using the EMP201 form.

Related: Tax Basics for Business Owners

What happens at the end of a financial year?

  • Create a tax certificate for each of your employees. The tax certificate must contain personal and contact details in addition to their earnings and deductions for the period they were employed by you in the past financial year.
  • Download the free SARS e@syFile software from sarsefiling.co.za and capture the tax certificate information for each employee. If you use payroll software, you can simply import the data instead. SARS’ software will run a few checks and validations and warn you of any problems on the tax certificates.
  • Compile the reconciliation. Use the Employer Declaration on SARS e@syFile to capture the PAYE, UIF and SDL contributions you have calculated and paid to SARS during the past 12 months. Once these totals add up to the amounts you have declared on the employee tax certificates, you are ready to submit.
  • Send SARS the final result. You can send the reconciliation in the EMP501 form and the tax certificates you have created to SARS online if you have a SARS eFiling login. Alternatively, the electronic files can be stored to a disk in PDF format and handed in at your local SARS branch with a printed and signed copy of the final recon.

Madelein Taljaard is an expert in areas of employee tax and legislative changes affecting payroll. Madelein joined Sage Pastel Payroll & HR in 2000. She is currently Group R&D Development Manager for Sage Australia, Asia, Middle East and Africa, as well as Senior Product Manager for Sage Pastel Payroll & HR. She is responsible for the development of Sage Pastel Payroll & HR software as well as Sage Pastel Accounting’s desktop products. In addition, she manages the integration of Sage Pastel desktop products in South Africa into other Sage initiatives like Sage Pay. Madelein has a BCom in financial management and has 16 years’ experience in personal income tax and employee tax.

Tax

7 Direct And Indirect Taxes You Should Consider Before Registering Your Business

Tax planning is critical for us all more so for the success of your newly registered entity.

Kenlin Stride

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If your business has been registered, guess what in the eyes of the law your business is now a legal entity, congratulations. What does this mean? Well this means your business is a distinct legal entity separate from you in the eyes of the law, this means your business can now enter into contracts to purchase assets, utilise debt instruments and hire staff amongst other things. This unfortunately also means your business is subject to tax compliance. Let me try and give you a snapshot of what taxes to be aware of as a business owner however not all will automatically be applicable to your business.

1. Income Tax

Income tax is one of the state’s main sources of revenue and is levied on taxable income determined in terms of the Income Tax Act. All businesses must be registered for Income Tax. It is illegal not to be registered for Income Tax if you have a business.

2. Provisional Tax

The payment of provisional tax is to assist taxpayers in meeting their tax liabilities by way of installments out of their taxable income. Income tax is only paid once the full 12 months of trading is complete. It would be impractical to expect taxpayers to pay one large lump sum of income tax to SARS. Companies automatically fall into the provisional tax system.

Related: Tax Basics For Business Owners

3. Small Business Corporations Tax

SBC Tax was introduced as a tax relief measure for small business. SBC Tax will not be calculated on the flat 28% of taxable income. Dependent on your annual taxable income, you will be liable at the percentages in the table.

4. Pay As You Earn

Employees’ tax refers to the tax required to be deducted by an employer from an employee’s remuneration (salary) paid. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE.

5. Value Added Tax

This is an indirect tax levied on the ‘sale’ and ‘purchase’ of goods and services. This tax is not compulsory unless your turnover has exceeded R 1 000 000 mark however you choose to register voluntarily if it makes sense for your business strategy.

Related: How to Reduce Your Taxable Income

6. Unemployment Insurance Fund

UIF contributions are compulsory for all employees working more than 24 hours a month. The contributions are paid to the Department of Labour (DOL), or can be included in the SARS payment of PAYE on the EMP201

7. Workman’s Compensation

An employer must register with the Commissioner within seven days after the day on which he employs his first employee, (this includes the Director or Owner of the company)

You might be thinking tax compliance, what’s the big deal? I’ve been doing that most of my adult life, well personal tax is very different to business tax. As the director of your newly registered business it is assumed that you have done the research as to what laws to comply with as a business owner. In reality however the thrill of having a business overshadows the mundane compliance elements that go hand in hand when running a business. Let’s face it as much as your business is now a legal entity your business won’t do the research and comply with the necessary taxes on its own that responsibility lies with the director and when I say director I mean you.

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Tax

Tax Refunds – What You Need To Know

You are able to object/dispute any SARS decision not to release the refund on efiling or through your tax practitioner.

Maselaelo Mphela

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Most taxpayers are not aware of the requirements for a tax refund to be facilitated and SARS very often will delay paying out the refund. In this article, we will look at the requirements taxpayers need to be aware of and the Tax Ombud’s report on the investigation into alleged delayed payment of refunds as a systemic and emerging issue in terms of section 16 (1) (b) of The Tax Administration Act No. 28 of 2011 (TAA).

What you need to know as a taxpayer:

  • The tax refund must be claimed within 5 years from date of submission of the return.
  • SARS has the right to withhold the refund as per section 190 (2) of TAA: “SARS need not authorise a refund as referred to in subsection (1) until such time that a verification, inspection or audit of the refund in accordance with Chapter 5 has been finalised.”
  • Authorisation of payment of refund done once SARS is satisfied with the acceptable security provided by the taxpayer in terms of section 190 (3) of TAA: “SARS must authorise the payment of a refund before the finalisation of the verification, inspection or audit if security in a form acceptable to a senior SARS official is provided by the taxpayer.”
  • As a taxpayer, you need to ensure that you verify your banking details with SARS and that there are no outstanding returns in order for your refund not to be delayed.
  • Any decision not to refund by SARS is subject to an objection and appeal by the taxpayer in terms of section 190 (6) of TAA.
  • Refunds less than R100 are not refunded but carried forward to the next tax period.
  • To view the status of your refund you can use the Refund Dashboard on efiling under the ‘Returns History’ tab for the tax period in question or contact the SARS call centre.
  • Interest starts accruing from 21 business days from the date on which the refund became due, i.e. verification/audit outcome finalised.

Related: Tax Basics For Business Owners

Tax Ombud’s Report

The Tax Ombud’s report identified various mechanisms used by SARS to defer or delay the payment of refunds due:

  • SARS failing to link submitted supporting documents at a SARS branch to the main file.
  • The use of special stoppers on taxpayers’ accounts and the delay in lifting the stoppers, e.g. being required to verify banking details in person at a SARS branch. Even after the verification is done, there is still a lengthy delay in paying the refund.
  • Using the filing of new returns as an excuse to block refunds. The system blocks already verified refunds the moment a subsequent return is submitted by the taxpayer.
  • Withholding of refunds for one period while an audit/verification is in progress on another period. This is contrary to section 190 of the TAA.
  • The use of historic returns suddenly reflecting as outstanding but these have never been shown as outstanding on the Tax Clearance Certificate or the Statement of Account.
  • The raising of assessments and passing of journals to absorb credits on taxpayers’ accounts, i.e. overpayments. In doing so, SARS creates fictious tax liabilities instead of making a decision on the refund.
  • Requesting further information during the audit to delay finalisation, thus delaying the time frame from when the interest accrues.
  • No turnaround time for assessments successfully disputed.
  • Obstacles regarding diesel refunds.
  • Raising of assessments prematurely before the 21 days to submit the supporting documents
  • Refunds for periods that have been verified automatically set-off against bad debts on other periods not withstanding a request for suspension or where there is the suspension of payment. SARS may not instate any collection steps from date of submission of request for suspension of payment until 10 days after decision to not grant the request has been communicated to the taxpayer in terms of section 164 (6).

You are able to object/dispute any SARS decision not to release the refund on efiling or through your tax practitioner.

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Company Posts

Reimagine The Use Of Technology

The phenomenon of ‘big data’ is rapidly catching up with the world of tax.

PwC

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As tax professionals we live in a new reality, fueled by the blinding pace of change. The digital revolution is here. Reimagine the future of the tax function through the lens of analytics.

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