Financing is the act of providing funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals. PATC is here to help you understand business financing, keep reading the blog as we explore your options. (more…)
Tax Planning: Fringe Benefits & Allowances
What are the possible allowances and fringe benefits?
Below are the lists of available allowances and fringe benefits.
Also Read Now: Valuation of Shares, Goodwill & Members Interest
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Preservation, Safekeeping & Maintenance of Records
A person must keep records, books of account or documents. The retention of records will assist a person to fulfil the requirements of the Tax Administration Act and to satisfy SARS that the person has complied with the requirements.
Who is it for?
Tax Administration Act requires the following persons to keep records:
Catching Up With PATC’s Owner & Tax Expert: Gavin Bacon
As you may well know, in recognition of Gavin’s vast experience and Tax Degree, The Office of the Registrar for the Republic of South Africa appointed Gavin in 2017 as a Commercial Member of the Tax Court for a period of five years – an appointment Gavin was honored to accept.
In an effort to keep up-to-date with the needs of the Tax Court, Gavin attends Tax Court meetings to re-establish his membership, ongoing support and commitment to the Tax Court, with the same dedication he has brought to the industry for the past 3 decades – and counting! He by no means ‘works for the other team’ instead utilising his founded knowledge to better serve the community and his clients. (more…)
Foreign Currency Transactions
A foreign-currency transaction is one that requires settlement, either payment or receipt, in a foreign currency. When the exchange rate changes between the original purchase or sale transaction date and the settlement date, there is a gain or loss on the exchange. Whoever views the denominated currency (the currency the transaction takes place in) as the foreign currency takes the gain or loss. Companies that make many foreign-currency transactions may buy a forward currency contract to get a guaranteed rate. Businesses with few foreign-currency transactions are more likely to convert currency on the spot, or current, rate.
Individual investors who are considering participating in the foreign currency exchange (or “forex”) market need to understand fully the market and its unique characteristics. Forex trading can be very risky and is not appropriate for all investors. (more…)
Valuation of Shares, Goodwill & Members Interest
Shares:
The valuation date value of shares listed on a foreign recognized exchange that are not listed on the JSE must be determined on the same basis as local shares. However, unlike local shares the market value of the shares is based on the ruling price on the last business day preceding valuation.
The methods of valuation depend on the purpose for which valuation is required. Generally, there are three methods of valuation of shares; (more…)
Requirements in terms of the Companies Act in Respect of Annual Financial Statements
Private or personal liability companies that are required to audited by the Companies Act, 2008 or regulation 28 must file a copy of the latest approved Audited Financial Statements on the date that they file their annual return with the CIPC.
The following private companies are required to have their annual financial statements audited;
- Any private or personal liability company if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million;
- Any private or personal liability company that compiles its financial statements internally (for example, by its financial director or one of the owners) and that has a Public Interest Score (PIS) of 100 or more;
- Any private or personal liability company that has its financial statements compiled by an independent party (such as an external accountant) and that has a Public Interest Score (PIS) of 350 or more;
Tax Avoidance vs Tax Evasion
Tax avoidance is the legitimate minimizing of taxes, using methods included in the tax code. Businesses avoid taxes by taking all legitimate deductions and by sheltering income from taxes by setting up employee retirement plans and other means, all legal and under the Internal Revenue Code or state tax codes.
Most taxpayers use some form of tax avoidance.
For example, individuals who contribute to employer-sponsored retirement plans with pre-tax funds are engaging in tax avoidance because the amount of taxes paid on the funds when they are withdrawn in retirement is usually less than the amount the individual would owe. Furthermore, retirement plans allow taxpayers to defer paying taxes until a much later date, which allows their savings to grow at a faster rate. (more…)
Zero-Rated, Exempt & Deemed Supplies
Zero-rated supply
– refers to items that are taxable, but the rate of tax is nil on
their input supplies. The government doesn’t tax its retail sale but allows credits for the value-added tax (VAT) paid on inputs. This reduces the price of a good.
Governments commonly use zero-rated goods to lower the tax burden on low-income households by zero-rating essential goods.
NB in South Africa we also have goods that zero-rated because the goods are leading contributors to other manufactured goods and thus a leading part of a broader supply chain. Many food items are designated as zero-rated goods; these food items are sold with a 0% value-added tax. (more…)
Tables of Interest Rates From SARS
Interest rates charged in terms of the legislation administered by SARS are split into three main categories, i.e. –
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interest charged on outstanding taxes, duties and levies and those payable in respect of refunds of tax on successful appeals and certain delayed refunds
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interest payable on credit amounts (overpayment of provisional tax) in terms of section 89quat(4) of the Income Tax Act, 1962
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interest applicable to a loan denominated in the currency of the Republic, as described in paragraph (a) of the definition of ‘official rate of interest’ in section 1(1) of the Income Tax Act, 1962
For ease of reference, the tables of interest rates are given below in three separate documents, numbered according to the three main categories, i.e. the first group of interest rates can be found in Table 1.
