Here is some of the answers of the most commonly asked questions about the SARS and other processes.
Personal income Tax
Personal income tax is tax payable on monthly salary. The tax is deducted by the employer every month and paid over to SARS. An income tax return is then done once a month, to calculate the tax for the annual income.
Business Income tax
Business income tax is based on the annual profit of the company. Financial statements are compiled every year and used to submit the business income tax return to SARS.
Provisional tax is calculated based on the income of the current year and is submitted to SARS twice a year, in August and February. Individuals can only be liable for provisional tax if they are trading as sole proprietors or if they receive more than one source of income.
Financial statements should be compiled once a year by every company. The financial statements are compiled after year end, and the tax return should be submitted to SARS by the end of February of the next year. Financial statements should reflect all transactions of the company, and is used to determine the profit or loss of the company for the year in question. Sole proprietors should also compile financial statements every year and should be used to submit the IT12 personal income tax return.
A sole proprietor is an individual who conducts a business in his personal capacity and does not have a registered private company.
UIF is paid over to the department of labour every month. 1% of the employees salary is deducted and the employer makes an equal contribution of 1%. The maximum amount that can be deducted from an employee is R148.72 per month. A UI19 return must be submitted to the department of labour every month, before the 7th.
PAYE(Pay as you earn) is the tax deducted from employees salary by the employer every month and paid over to SARS. The tax is calculated based on the tax tables released by SARS after the government has made it’s budget public.
Workmen’s compensation, also referred to as WCA, is alsopart of the department of labour. All companies should be registered with them. This is the money that goes towards the insurance for when employees are injured whilst on duty. A return(WAS8) should be submitted to the department of labour every year in May. The contribution is based on the provisional salaries for the current year as well as the actual salaries of the previous year. After the contributions have been paid, a letter of good standing will be issued, which is valid for one year. A copy of the letter of good standing should always be kept at the business premises, as the department has inspectors who randomly visits businesses to ensure that they are compliant.
Central supplier database
The central supplier database(CSD) is a database kept by treasury. All companies who wish to do business with government should be registered on this database. All the company’s details should be kept up to date on the database at all times.
All companies are registered and maintained at CIPC, formerly known as Cipro. All details of companies should be kept updated here, such as address and directors details. All companies are required to submit annual returns to CIPC in order to keep the company status as “In business”. Penalties are payable on annual returns that are submitted late. And companies will eventually go into status as :In deregistration process” and then “Deregistered”. It is however possible to restore a company that has been deregistered. It is also possible for any financial institution(bank) to freeze a company’s bank account if the company changes status on the CIPC database.
Share certificates are issued to all shareholders of a company. A copy of the share certificates should always be kept in a share register, as well as any transactions relating to shares.
BEE affidavit vs BEE certificate
All companies that have an annual turnover of less than R10m can only be issued with a BEE affidavit. Th level of the affidavit is based on the ownership of the company. If a company has an annual turnover of more than R10m can be issued with a BEE certificate. The BEE score on the certificate is based on 5 factors, namely ownership, management control, skills development, procurement and employment equity. BEE affidavits and certificates are indicated between level 1, the highest and level 4, the lowest.
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