Tax invoices

South Africa operates a VAT system whereby businesses (vendors) are allowed to deduct the VAT incurred on business expenses (input tax) from the VAT collected on the supplies made by the business (output tax). The most important document in such a system is the tax invoice. Without a proper tax invoice a business cannot deduct input tax on business expenses.

The VAT Act prescribes that a tax invoice must contain certain details about the taxable supply made by the business as well as the parties to the transaction. The VAT Act also prescribes the timeframe within which a tax invoice must be issued (i.e. 21 days from the time the supply was made).

A business is required to issue a full tax invoice when the price is more than R5 000 (referred to as consideration for the supply) and may issue an abridged tax invoice when the consideration for the supply is R 5 000 or less than R5 000. If the consideration for the supply is R50 or less, a tax invoice is not required. However, a document such as a till slip or sales docket indicating the VAT charged by the supplier will be required to verify the input tax deducted.

As from 8 January 2016, the following information must be reflected on a tax invoice for it to be considered valid:

  • Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”
  • Name, address and VAT registration number of the supplier
  • Name, address and where the recipient is a vendor, the recipient’s VAT registration number
  • Serial number and date of issue of invoice
  • Accurate description of goods and /or services (indicating where applicable that the goods are second hand goods)
  • Quantity or volume of goods or services supplied
  • Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax)

To ensure that the Tax Invoice meets the SARS requirements, a checklist has been developed. To access the checklist, click here.

Source: SARS website

(http://www.sars.gov.za/ClientSegments/Businesses/Government/Pages/Tax-Invoices.aspx)

This article is a general information sheet and should not be used or relied upon 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)

SARS VAT reviews and audits

It has become a common occurrence for vendors to receive a notice for a VAT review from SARS, which requires the vendor to submit supporting documentation in respect of a specific VAT201 return within 21 days. If the vendor fails to submit the supporting documentation, SARS may issue an additional assessment, disallowing the full value of the input tax claimed for that period. The vendor then needs to lodge an objection against this additional assessment and submit the necessary supporting documentation to substantiate the input tax claimed.

When a VAT return is submitted, that return is measured against certain pre-set risk factors on the computerised system of SARS. If certain parameters according to this system are exceeded, a review letter will be issued automatically by the system to the particular VAT vendor. No historical profile is maintained per vendor, and there is no limit on the number of review letters that can be issued. SARS can issue a review letter for each VAT period, even for periods where the vendor had made a payment to SARS.

During December 2011 SARS issued a number of limited scope audit engagement letters to various large companies, more specifically companies in the construction industry. The information requested was to be submitted within 21 days from the date of the engagement letters, which were issued between 12 and 20 December 2011. Many of the companies had already closed for the holidays, and had limited or no staff available.  Unfortunately the legislation provides no relief in this regard, except that the notice period should be reasonable. The engagement letters focused in particular on:

  • the VAT treatment of indemnity payments received;
  • bad debts recovered;
  • creditors older than 12 months on which an input tax deduction was claimed;
  • the sale of fixed assets;
  • input tax claimed on deductions relating to “motor car” and “entertainment” expenses; and
  • input tax claimed on supplies that are defined as “financial services”.

Regardless of the care taken by vendors to ensure the correct treatment of VAT claims, errors may still occur. Basic errors made by vendors include the claim of input tax deduction on the use of a rental vehicle for business trips, if that vehicle is a “motor car” as defined.  Year-end functions and staff refreshments are defined as “entertainment”, and no input tax deductions may be claimed. It is only when these supplies are consumed or used to make taxable supplies, that a valid input tax deduction may be claimed.

Amongst others, SARS focuses on the correct VAT treatment of the following during the performance of an audit:

  • validity of VAT invoices issued and received;
  • zero rated sales;
  • employee benefits as defined in the Seventh Schedule of the Income Tax Act;
  • insurance claims received; and
  • sale of capital goods.

It is very important that the staff responsible for the keeping of the accounting records should be adequately trained and informed in this regard, and sufficient controls should be in place to avoid these errors.

This article is a general information sheet and should not be used or relied upon 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)

Tax rates for 2017

With the fiscal year-end for individuals on 29 February 2017, it is useful at this stage to be reminded of the various tax rates applicable for the 2017 tax year.  These are set out in the Rates and Monetary Amounts and Amendment of Revenue Laws Bill dated 24 February 2016. (to the extent that these rates were amended).

Below we set out some of the more relevant rates and tables that may be applicable to our clients.

Income tax rates for individuals for the 2016/2017 tax year:

T3

Interest Exemptions from Income Tax:

 T1


Medical credits available to be deducted against an income tax liability:

T2

The following rebates will apply for individuals against their tax liability calculated in accordance with the above:

Cumulative Rebates from Income Tax for Individuals:

T4

Income Tax for companies is levied at 28% and 41% in the case of trusts.

Small Business Corporations are not taxed at a flat rate of 28%, but according to the below table for tax years ending between 1 April 2016 and 31 March 2017:

T5

The VAT rate is retained at 14%.  The same applies to donations tax and estate duty, both still levied at 20%.Capital gains tax is calculated by including 40% of an individual’s net capital gains (less R40,000 exemption) in their taxable income to be used for calculating their income tax liability (see table above).  The inclusion rate for ordinary trusts and companies is 80%.

Transfer duty applicable to individuals:

T6

T7

This article is a general information sheet and should not be used or relied upon 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)Turnover tax rates:

Step by step guide to easy UIF claims

Alice recently lost her job. She is feeling very despondent since she has no income to provide for her family and cover her monthly expenses. She recalls that while she was employed she made monthly Unemployment Insurance Fund (UIF) contributions. However, Alice has no idea how to claim from the UIF and whether she qualifies as a claimant.

  1. WHO CAN CLAIM FROM THE UIF?

All workers who contributed to the UIF can claim if they have been fired, if their contract has come to an end, or if their employer is bankrupt. Domestic workers who have more than one employer can claim if they lose their job with one of their employers or if an employer dies.

  1. WHO CANNOT CLAIM?
  • Persons who resigned or quit their jobs
  • Persons who are suspended from claiming due to fraud
  • Persons who do not report at set dates and times
  • Persons who refuse training and advice that may be given by UIF staff
  • Persons who receive benefits from the Compensation Fund or from an Unemployment Fund established under the Labour Relations Act
  1. WHEN CAN I CLAIM FROM THE UIF?

You can start claiming from the last day of employment until your UIF benefits are used up or you started working again. Your current contract must have expired before registering for UIF. Furthermore, you must claim within six months after your last day of employment.

  1. HOW DO I REGISTER FOR UIF BENEFITS?

Unemployed workers must apply for UIF benefits in person at their nearest labour centre. 

Step 1: Documentation

This step is of utmost importance if you want to claim your UIF successfully for the first time. It is important to have all the necessary documentation in order to avoid repeated trips to the labour centre. The required forms are available as PDF downloads at ezuif.co.za/uif-forms.

You need:

  • Your 13-digit bar-coded ID or passport
  • UI-2.8 for banking details (Note that this needs to be signed by your bank and be accompanied by a stamped bank statement to confirm your bank account details.)
  • Form UI-19 to show employment history. This form is to be filled in by your previous employer. (Note that the Labour Department will check your last four years of work history to calculate your UIF benefit amount. Make sure you have all necessary declarations from previous employers dating back four years. If an employer has failed to issue you with a declaration, he must also fill out a UI-19 form.)
  • A workseeker form
  • Last two pay slips

Step 2: Go to the nearest labour centre

Once you have all the documents, go to the nearest labour centre. You can find the address and telephone number of your nearest centre at http://www.labour.gov.za/contacts/contacts. Note that the average waiting period at the labour centre can be anything from two to six hours, so make sure you have enough time. There is a slight chance that the staff at the labour centre may ask unemployed workers to go for training or advice – this is within their rights and you will have to take their advice.

  1. HOW WILL I BE PAID?

Once you have registered for UIF benefits the staff at the labour centre will issue you with a UIF checklist. On this checklist you will find the address of the venue where you must sign for payment, as well as the date and time for your attendance.

Step 1: Go to the signing venue

You must appear at the designated venue on the date and time stipulated in order to sign for your first UIF payment. It is important to be on time. Take the UIF checklist and your ID document with you.

Step 2: Sign the unemployment register and receive UI-6A forms

If you have successfully registered for UIF, your name will be read out from a list. You will be required to sign a register to mark your attendance and confirm that you are still unemployed. Collect all the UI-6A forms (one for each future signing). Keep all these documents in a safe place as you will need them every time you are due for a UIF payment. This whole process can take up to three hours. Your first payment will be paid into your bank account within two to four days after you have signed the register.

Step 3: Note your next signing date

Make sure you are aware of your future signing dates – they are printed on your UI-6A forms. Signing dates will be approximately four weeks apart. You will have to hand in the relevant UI-6A form every time you attend, so make sure you have it with you. Note that your application may be delayed and not yet processed by the date of your first signing. It is recommended that you call the relevant labour centre the day before going to the signing venue to ensure that your application has been processed. If your application has not yet been processed you do not need to go to the signing. Ask for the date of the next signing.

  1. HOW MUCH WILL I BE PAID?

The amount that you will be paid will depend on the amount of your monthly salary when you were employed.

Workers will receive approximately 36-56% of their average monthly salary for the previous four years (which is capped at a maximum amount though) and on the basis of the higher the salary, the lower the percentage.

How long you will be eligible to receive UIF payments depends on the length of time that you have contributed to the fund. You are eligible to receive one day’s worth of benefits for every six days that you had worked and contributed to the UIF over the previous four years. The maximum number of days you can claim for is 238

This article is a general information sheet and should not be used or relied upon 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)

Nwanda Internal News (May 2016)

1.Awesome Rewards go to:

  • Nicole Pretorius – Completion of SAICA Articles
  • Itumeleng Moshayi – Excellent work done on all her audits
  • Venice Jordaan – For going the extra mile

2. Farewell to staff members :

We say farewell to the following staff members :

  • Razeen van Rooyen
  • Nishani Baghwager
  • Nhlanhla Ngwasha
  • Siphokazi Kubheka

We wish them success in their future endeavours.

3. Welcome to our new Trainees :

  • Natasha Bothma
  • Toni Martin
  • Safwaan Mansoor

4. Welcome back to Anastasia who has returned from maternity leave.

5. All the best to those busy studying for the May/June exams.