Author: Sinead

We haven’t yet found a client who loves paying tax, but ensuring that your personal tax return is properly submitted is critically important to staying on the right side of tax law in South Africa. 

You may be wondering what the worst-case scenario could be if you didn’t submit your personal tax return properly… Other than jail time, and, let’s face it , South African jail certainly is not the place any-one wants to end up there are some pretty hefty penalties.  Let’s take a look at what these penalties are and when they come into effect.

1. Late payment of tax, among other things.

This penalty is a percentage penalty and is applied for late payment of tax.  If you pay tax late, you may be charged a percentage penalty ranging from 5% to 50% of the tax due for late payment  and interest at the prescribed rate. – Read more here.

2. Late submission of a tax return

SARS may apply a fixed penalty amount for the late submission of a tax return.  This amount is dependent on the tax bracket of your SARS profile. non submission of tax returns may be subject to a penalty of between R250 – R16000 per month. Depending on the taxable income of the individual. – Read more here.

3. Reportable Arrangement penalty

The Tax Administration Act, No 28 of 2011 (TAA) denotes certain types of transactions that must be reported to SARS.  These are called Reportable Arrangements and if they are not reported to SARS, a penalty and interest is implemented. – Read more here.

4. Understatement Penalty

If you are found to have understated your earnings to avoid paying tax within a certain tax bracket, SARS will implement an Understatement Penalty.  This penalty can be implemented over and above any of the previously mentioned penalties and could be up to 200%. – Read more here.

As the Understatement Penalty could be the biggest tax penalty applied, the Venaccuracc team thought we’d take some time to discuss the 6 predetermined behaviours SARS looks out for when deciding if an Understatement Penalty should be applied.

1. A substantial understatement of income in the tax return

This isn’t a behaviour as much as it is figures in your tax return.  Make sure you are recording the right income and expenses in your tax return, and if you’re not sure, give the Venaccuracc team a call here.

2. Reasonable care not taken when completing the tax return

SARS statement in this regard is that “reasonable care means that a taxpayer is required to take the degree of care that a reasonable, ordinary person in the circumstances of the taxpayer would take to fulfil his or her tax obligations.”

If you’re worried that you may be penalised for not taking reasonable care, then make sure to call the Venaccuracc team here for tax support.

3. No reasonable grounds for the tax position taken

If you are unable to support your tax position with the correct submission of information, then SARS may view your return under the Understatement Penalty behaviour.  Make sure you contact the Venaccurac team here to support your tax return submission.

4. An impermissible avoidance arrangement

If you have entered an item into your tax return where it appears to be an avoidance arrangement, which is “an impermissible avoidance arrangement if its sole or main purpose was to obtain a tax benefit” then SARS may apply the Undertatement Penalty.  If you are unsure about your tax return, then contact the Venaccuracc team here today.

5. Gross negligence

According to the SARS short guide to the TAA Gross negligence is described as “doing or not doing something in a way that suggests a disregard for the consequences.”  If SARS views your tax return as being completed with Gross Negligence you may receive an Understatement Penalty.  The Venaccuracc team are experts in tax returns and are here to help you make sure your tax return is right.

6. Tax evasion

Tax evasion is defined as illegal activities an individual or organisation take to avoid paying tax. – Read more here.

The Venaccuracc team recognise that, if you are unfamiliar with, or just don’t have time to spend on filling out your tax return, you may find yourself in a situation where your tax return falls into one of these 6 behaviours.

Our team is standing by to assist you to get your tax return right the first time. – Contact us here now.

Personal Tax Returns – Venaccuracc expert accountants 5 tips to ensuring a fuss free personal tax filing experience.

If you haven’t already done so, then you need to diarise these dates for personal tax filing in South Africa:

• 1 July 2021 – 23 November 2021 for non-provisional tax payers
• 16 August 2021 – 23 November 2021 for non-provisional tax payers who require assistance filing at a SARS branch.
•  1 July 2021- 31 January 2022 for provisional tax payers and trusts filling online via eFiling or at a SARS branch.

Once you’ve diarised the dates set aside some time to go through the SARS eFiling process videos or tutorials – view here to decide if you feel confident to file your personal tax, and if not make sure to give the Venaccuracc accounting experts a call here well in advance so that we can help you have a stress free personal tax season this year.

To further make your life easier we’ve put together 5 steps to get you ready for personal tax season.

Venaccurac’s Personal Tax Readiness Step #1: Determine whether you need to file a tax return based on the tax threshold amount.

You would only need to file a tax return if you received taxable income over the tax threshold. The tax threshold amounts for 2021 are:

• R83 100 if you are younger than 65.
• R128 650 if you are between 65-75
• R143 850 if you are older than 75

If you are unsure whether you should be filing a tax return, give the Venaccurac team a call here and we will assist you.

Venaccurac’s Personal Tax Readiness Step #2: Determine whether you need to file a tax return based on eligibility of auto-assessment.

SARS is continuing to roll out auto-assessments for personal tax.  If you have been notified that you are eligible for an auto-assessment and your gross income exceptions, deductions and rebates are reflecting correctly you can accept the auto assessment.  For more information visit the SARS website here.

Venaccurac’s Personal Tax Readiness Step #3: Determine whether you need to file a tax return manually or by auto-assessment based on your gross income.

Another reason you may not be selected to complete an auto-assessment for your personal tax return is if your gross earnings are below a certain threshold. This may be because your income consists of the following categories of income:

• South African sourced interest (not from a tax free investment) less than:
• R23 800 for individuals below the age of 65
• R34 500 for individuals age 65 and older
• Amounts received from a tax free investment
• Remuneration not exceeding R500 000 from one employer where that employer deducted the required tax.
• You received certain allowances during the tax year

Make sure you get in touch with the Venaccurac team of experts to help you ascertain your personal tax situation by getting in touch with us here.

Venaccurac’s Personal Tax Readiness Step #4: Determine whether you need to file a tax return based on the number of employers you have.

As a South African tax resident, if you have earned over the tax threshold, you will need to file a tax return even if you changed jobs part-way through the year or have more than one employer.

If you are unsure whether you should be filing a tax return, get in touch with the Venaccuracc team here today.

Venaccurac’s Personal Tax Readiness Step #5: Determine whether you need to file a tax return based on certain criteria:

There are some situations, as a South African tax resident, where you may be required to submit a tax return whether your taxable income was exceeded or was less than the tax threshold.  These may include:

• If you ran a business as the business owner in South Africa or outside of South Africa
• If you sold assets where the capital gain or loss was more than R40 000 for that tax year.
• If you owned foreign currency or assets with a total value more than R250 000 during the tax year.
• If you earned a foreign salary as an employee outside South Africa.
• If you earned income or capital gains from foreign currency/assets outside of South Africa
• If SARS sent you a tax return and asked you to complete it.

For a great deal more technical detail visit the SARS website here or if you are finding the “ifs” and “buts” difficult to decipher then the Venaccuracc team is here to help you get the right documentation in at the right time.

View our website here.

Let’s be honest.  It hasn’t been a fun 4 weeks.  COVID-19 lockdown restrictions and looting has put a lot of businesses into difficult trading situations while consumers tighten their belts in shock and worry.  But there are, always, things to be done in business and South Africans are famous for their tenacity and can-do spirit.  So, with this in mind, the Venaccuracc team have put together 5 accounting survival tips for businesses to use until things start to turn again for the positive – and being the eternal optimists we are, we believe they will.

Venaccuracc Business Survival in Tough Times Tip #1: Make Sure your Accounts are Up to Date.

Critical to managing your business in difficult times is a crystal-clear vision of exactly what is going on with your money. How much money is tied up in assets, how much money is due to you by customers, how much money you owe to suppliers.  All of these aspects can make or break a business in normal operating circumstances, but when times are tough, it is even more important.

The Venaccuracc team are able to help you make sense of accounting chaos by quickly and efficiently sorting through your books to give you the confidence to make bold financial decisions that could save your business.

– Get in contact with us here.

Venaccuracc Business Survival in Tough Times Tip #2: Review your Current Service Providers.

Although the current economic climate is very uncomfortable, it does force businesses to critically examine aspects of the business that may have been running unchecked for some time.

Audit each service provider according to your business needs and take a little time to get in some competitive costings.  You may find you are paying for unnecessary services and even if you discover that your service providers are 100% on track, at least you know that aspect of your business is working as efficiently as possible.

For an obligation free quote on accounting services contact the Venaccuracc team here today.

Venaccuracc Business Survival in Tough Times Tip #3: Outsource Business Functions for Increased Efficiencies.

By outsourcing certain functions such as your accounts, marketing and even HR management, you could free up cash flow in your business and often increase efficacy.

Contracted services stipulate exactly what is expected and you can often choose specific aspects that are most important to your business while negotiating prices.

If you need immediate accounting support to help your business find money efficiencies contact the expert team at Venaccuracc here.

Venaccuracc Business Survival in Tough Times Tip #4: Plan for Growth

Nothing demotivates a team faster than the belief that their jobs are in jeopardy.  Look for new opportunities, new routes to market and new ways of doing things. 

Get your team involved in solving cash flow problems in the business so that when you find areas you’d like to grow into, you have the fund available to take advantage of those opportunities.

Venaccuracc Business Survival in Tough Times Tip #5: Ask for help.

South Africans are notorious for finding a way through tough times but sometimes you do need help. If you are feeling financially stuck give the Venaccuracc team a call here, we specialise in growth-oriented accounting and can help you discern the proverbial wood from the trees. 

Apart from accounting help, the leading South African banks also have a variety of financial options available to help and other than that, various debt counselling organisations are also available to help.

While the past month has placed many businesses in extremely difficult circumstance, here at Venaccuracc we believe that the indominable South African spirit will prevail and these times will be remembered as yet another hurdle we have conquered.