Nwanda Internal News (March 2016)

Farewell to Raeesah Shaik, Nikki Padarath and Caroline Koto. 

Awesome Rewards awarded to:

Nhlanhla Ngwasha and Aasimah Khan for going the extra mile
Ncamiso Simelane for providing excellent training to 1st year trainees

Aasimah Khan for going the extra mile

Farewell to three staff members:

We bid farewell to Raeesah Shaik, Nikki Padarath and Caroline Koto.
We wish them success in their new careers.

Congratulations to Saafiyah Ahmed Bashir on her engagement to Raeez Majam on Saturday 27 February 2016.

Saafiyah&Raeez_028

The partners and the staff of Nwanda congratulate our successful current and prior staff members on their passing of the Board Exam. Well done Brett Beetge, Proffessor Mafela, Jean-Pierre Oosthuizen and Deloshnie Govender.

SARS Power of Attorney: What your Tax Practitioner can legally do on your behalf

A taxpayer or representative taxpayer must grant a tax practitioner power of attorney before the tax practitioner can legally work on the taxpayer’s tax affairs. A “Special Power of Attorney to Tax Practitioner” (hereafter “power of attorney”) must be completed and signed by the taxpayer or a representative taxpayer on behalf of an entity.

A power of attorney must contain the following minimum information:

  • Full names and identity number or passport number of the taxpayer or representative taxpayer.
  •  Name of the tax practitioner firm.
  •  The name and identity number or passport number of the tax practitioner.
  •  An indication of the capacity in which the taxpayer is granting the power of attorney:
    1. Whether the power of attorney is granted by the taxpayer in his or her personal capacity, or
    2. If the power of attorney is granted by a representative taxpayer on behalf of an entity, the entity’s name is required.
  •  An indication of which of the following tasks the tax practitioner may perform in terms of the power of attorney:
    1. Apply for registration at SARS and obtain a taxpayer reference number for taxes as specified in the power of attorney;
    2. Inform SARS of changes in registered details (except banking details);
    3. Request tax clearance certificates;
    4. Follow up on outstanding tax clearance certificates;
    5. Complete tax returns;
    6. Submit tax returns to SARS;
    7.Communicate with SARS;
    8. Submit relevant material e.g. supporting documents to SARS;
    9. Resolve account or compliance related issues in respect of tax periods specified in the power of attorney;
    10. Lodge an objection against an assessment by SARS;
    11. Pursue an objection against an assessment by SARS;
    12. Lodge an objection against a decision made by SARS;
    13. Pursue an objection against a decision made by SARS;
    14. File an appeal against an assessment by SARS;
    15. Pursue an appeal against an assessment by SARS;
    16. File an appeal against a decision by SARS;
    17. Pursue an appeal against a decision made by SARS;
    18. Apply for deregistration of certain taxes as specified in the power of attorney.
  • Confirmation by the taxpayer or representative taxpayer that tasks that have been delegated to the tax practitioner may be done by a person under the tax practitioner’s direct supervision.
  • Confirmation by the taxpayer that any actions taken by the tax practitioner or a person under the tax practitioner’s direct supervision in terms of the power of attorney, shall be regarded as having been taken by the taxpayer himself/herself.
  • An undertaking by the taxpayer to ratify any actions taken in terms of the power of attorney as set out in the paragraph above.
  • The period for which the power of attorney will be valid.
  • Indication of the place and date on which the power of attorney was signed.
  • Signature of the taxpayer/representative taxpayer.
  • Signature and full names of two witnesses.

Even if the taxpayer or representative taxpayer authorises the tax practitioner to do so, a tax practitioner cannot perform the following actions:

  • Change the banking details of a taxpayer except in certain exceptional circumstances as specified by SARS. Please contact your tax practitioner for more information.
  • Receive money in cash or otherwise on behalf of a taxpayer.

All tax practitioners are required by law to register as such with SARS and a recognised controlling body. Taxpayers can confirm whether a tax practitioner is registered as required by visiting the SARS website.

It is true that the power of attorney required by SARS places an additional burden on taxpayers, representative taxpayers and tax practitioners. However, a well-drafted power of attorney protects all parties involved by formalising each party’s rights, obligations and expectations.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE) 

Reference List:

Passive income and SARS

Have you ever investigated passive income opportunities to earn extra money? Did you consider the effect that earning additional income might have on your current income tax liability? If your income increases, whether from a passive income source or otherwise, SARS will soon come to the party to claim its share of your profits. Do you know what the effect of earning passive income might be on your present tax situation? If not, do read the rest of this article.

What is passive income?

Passive income is money you earn now which you didn’t have to work for now. However, you did work for it when you set up your source of passive income in the past.

If you set up your passive income source correctly, it will continue to generate income with either a minimum or no presence from you as the business owner. That’s what makes passive income so attractive: there’s no direct link between the number of hours you work and/or must be present in the business, and the amount of money you can make.

Provisional tax considerations

A taxpayer will not be required to submit provisional tax returns if his/her only source of income is remuneration from their employer and the employer deducts PAYE on a monthly basis from such remuneration.

PAYE can only be deducted by an employer from remuneration paid to its employees. If you earn passive income which is not subject to PAYE, you will have to submit provisional tax returns. Provisional tax is calculated on the estimated taxable income for a specific tax year. Please consult your tax adviser for advice regarding any potential provisional tax obligations.

Income tax considerations

As with any type of business income, passive income will be subject to income tax. SARS will allow a taxpayer to deduct the expenses incurred in generating the passive income, provided that the expenses are tax deductible in terms of income tax legislation. A taxpayer earning passive income will thus be taxed on the resulting profit (passive income less expenses incurred to generate that passive income).

For an expense to be tax deductible against passive income, it must fulfil all the following requirements:

  • It must have been actually incurred (i.e. the expense must either have been paid already or be due and payable);
  • In the carrying on of any trade;
  • In the production of passive income (there must be a link between the expenditure and the passive income); and
  • Not be of a capital nature (i.e. the expense must not give rise to an enduring/long term benefit).

If you are not sure whether an expense will be tax deductible and/or at which amount, please consult your tax adviser for advice.

Dual-purpose expenses (i.e. expenses that were incurred both for business and private purposes at the same time) may be apportioned according to the ratio of the business-related portion to the total amount of the expense. Only the business-related portion of the total expense will be tax deductible.

The profit you earn as a result of your passive income venture will be added to your taxable income for a specific tax year. If you already earn income from another source (e.g. salary/wages), that income and the profit from passive income will be added together to determine your taxable income. Taxable income will thus increase, which might put you into a higher tax bracket with a higher tax percentage.

To avoid nasty surprises it is important to consider the income tax implications of a passive income opportunity before taking advantage of such an opportunity. Although the figures you use for the calculations will be estimates and might not be that accurate, it’s still better to do some semi-accurate calculations than no calculations at all.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference List:

Accessed on 3 September 2015:

Accessed on 9 September 2015:

 

 

Your obligations regarding returns to the Compensation Commissioner

In terms of the Compensation for Occupational Injuries and Diseases Act, No 130 of 1993 (“the Act”), it is required by any employer carrying on a business in South Africa to register as such with the Compensation Commissioner  (“the Commissioner”) for the purposes of occupational injuries and diseases.

This registration is required for each business of the employer separately, but certain types of business are exempt. A business is defined as “any industry, undertaking, trade or occupation or any activity in which any employee is employed”.

Once registered, it is required under this Act that every business must submit annually (usually at the end of March) a Return of Earning labelled the W.AS 8 to the Department of Labour. This return is generated by the Department of Labour and each return is issued with a unique bar code. The return can be submitted by post or electronically via the website of the Department of Labour.

Die Department of Labour then uses the information declared on the W.AS8 return to calculate and issue an assessment to the employer. The employer is assessed at a particular rate applicable to that specific business industry. Once the assessment has been issued to the employer, it must be paid before the due date that appears on the assessment.

The information declared as accurate and correct and signed by both the employer and the agent or payroll administrator on this annual return includes the following:

  • The total amount of remuneration for each month individually that was paid to employees for the current year, as well as the expected total remuneration for each month individually that will be paid for the following twelve months.
  • The average number of employees for each month individually for the current year, as well as the expected average number of employees for each month individually for the next twelve months.

All information relating to earnings and staff costs must be kept for at least four years. It is a criminal offence to misrepresent any of the facts and information declared on the annual return.

Problems that have been experienced by employers recently regarding the above procedures include the following:

  • Returns have not been issued or issued on time to employers:

For the last couple of years it has been the experience of some employers and their representatives that the W.AS8 Return of Earning has not been issued to them in time to complete and submit it, or in fact is has not been issued at all.

  • Assessments based on the W.AS8 Return of Earnings have not been issued:

Many employers have waited considerable time for their assessments to be issued to them for payment.

  • Assessments have been calculated at the incorrect rate for the employer’s industry:

In many instances it was found that incorrect rates for the specific business industry were used to calculate the assessed amount to be paid by employers. In some instances this led to significant variances between the correct amount to be paid and the incorrect amount calculated by the Department of Labour.

  • Objections on incorrect assessments are not being processed:

Many employers have raised objections against their incorrect assessments. Some of these objections have not been processed, while the Department of Labour still demands payment of the incorrect assessed amounts.

Auditors and accountants are very capable to assist employers in following the correct procedure to submit their returns, review the assessments for correctness and solve problems relating to the W.AS8 Return of Earnings.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)