Nwanda Internal News
(November 2017)

DAYS

Awesome Rewards were awarded to the following staff for November:

Kavitha Bhawanideen for completing her SAICA articles
Chante-Lize Coetzer for going the extra mile and completing her tax return in an accurate and timeous manner
Matthias Krafft for being 100% focused, a team player and delivering quality all of the time
Natasha Bothma for a job well done on consolidation of Renasa Group
Shaista Ebrahim for overall job well done on Simon Pies
Shane Short for always going the extra mile
Shene Miller for excellent work done while assisting in the Secretarial Department

New staff members:

A warm welcome to –

Andriana Hanegraaf who joined the accounting department.

 

Farewell to a staff member:

We say farewell to Safwaan Mansoor and Ghilaine Kikoba wish them success in their future career endeavours.

Third provisional tax payments

Provisional taxpayers are required to submit two returns annually: one after six months from the start of the relevant year of assessment, and again one on the last day of the relevant tax year.[1] Since provisional taxpayers are taxpayers who earn income in a form other than salaried income (and from which PAYE is deducted every month), the fiscus relies on the provisional tax regime to ensure a steady cash flow throughout a tax year by requiring provisional taxpayers to file returns twice during the course of the year of assessment.

By virtue of returns being filed during the course of a tax year, provisional tax is paid over on estimates of provisional tax. Practically, it is difficult for provisional taxpayers to know exactly how much tax is actually required to be paid by them at that stage already, be it six months into a tax year or on the final day of the tax year. Therefore, it is quite possible that provisional taxpayers may, after the conclusion of a relevant tax year, realise that the estimates submitted were insufficient and would be less than the eventual tax that will ultimately be payable once a final tax calculation is performed. The Income Tax Act therefore provides for a so-called “top up” payment to be made by provisional taxpayers within 6 months after the end of the relevant year of assessment (or 7 months, if the taxpayer’s tax year ends on February).[2]

“Top up” or third payments of provisional tax provide provisional taxpayers with two distinct advantages. First, it allows for a cash flow benefit whereby taxpayers are able to manage their future cash flows by opting to make an additional payment towards taxes that will eventually in any event become due once an annual income tax return is ultimately submitted and assessed. Secondly, a third provisional tax payment also carries with it a significant concession in the form of an interest benefit. Whereas interest would ordinarily accrue in favour of the fiscus on underpaid provisional tax and calculated from the first day following the end of the year of assessment,[3] timely third payments of provisional tax are deemed to have been made on the last day of the year of assessment, in other words together with the second provisional tax payment.

Example: XYZ (Pty) Ltd’s 2017 tax year ends on 30 April 2017. It submitted Rnil provisional tax returns for both its first and second provisional tax estimates. Subsequently though, in finalising its 2017 year accounts, it is realised that XYZ (Pty) Ltd made a significant taxable capital gain of R10 million during the 2017 financial year and which it did not take into account previously in submitting its provisional tax estimates. If it were to pay the taxes due on this amount as a third provisional tax payment by 31 October 2017, no interest will be levied against it on the amount once an assessment for 2017 is issued. If however no third provisional tax payment is made, interest will levied on the underpaid amount with effect from 1 May 2017 upon the issuing of an assessment.

[1] Paragraphs 21 and 23 of the Fourth Schedule to the Income Tax Act, 58 of 1962

[2] Paragraph 23A of the Fourth Schedule to the Income Tax Act, 58 of 1962

[3] Section 89bis(2) of the Income Tax Act, 58 of 1962

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)

Dividends tax returns

With effect from 1 April 2012, dividends tax was introduced to replace the then “secondary tax on companies” (or “STC”). The tax is currently levied at 20%. The dividends tax regime brought with it a requirement for dividends tax returns to be submitted periodically (if even no liability for dividends tax arose) and we wish to bring to our clients’ attention when this would be required.

From 1 April 2012, dividends tax returns were required for all taxpayers who paid a dividend.[1] Although not initially required, but the Income Tax Act was subsequently amended retrospectively to provide therefor. Returns were, from that date, not required for dividends received though. However, through various amendments being introduced, the scope of the dividends tax compliance regime was broadened significantly. With effect from 21 January 2015, dividends tax returns were also made compulsory for all dividends tax exempt (or partially exempt) dividends received.[2] The most significant implication flowing out of this amendment is that from this date, all South African companies receiving dividends from either South African companies, or from dual-listed foreign companies (to the extent that the dividend from the foreign company did not comprise a dividend in specie). The requirement for dividends received from dual-listed foreign companies to also carry with it the requirement for a return to be submitted was however removed a year later, with effect from 18 January 2016.

Where dividends are paid by a company, or dividends tax exempt dividends are received by any person from South African companies, the relevant returns (the DTR01 and/or DTR02 forms) must be submitted to SARS by the last day of the month following the month during which the dividends in question were received or paid. In those instances, where a dividends tax payment is also required, payment of the relevant amount of tax is to be effected by the same date too.[3]

Although the non-submission of dividends tax returns at present to not carry any administrative non-compliance penalties, we always encourage our clients to ensure that they are fully compliant with relevant requirements prescribed by tax statutes. We would therefore encourage our clients to revisit their dividends history and ensure that their records and returns are up to date and as required by the Income Tax Act.

[1] Section 64K(1)(d) of the Income Tax Act, 58 of 1962 (“the Income Tax Act”), as it read at the time.

[2] Section 64K(1A) of the Income Tax Act. Dividends received from regulated “tax free investment” accounts do not require a return to be submitted.

[3] Section 64K(1)(a) to (c)

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 to intensify action against tax offenders

Despite the fact that SARS has upheld their philosophy of education, service, and thereafter enforcement, they have noticed an increase in taxpayers not submitting their tax returns by the stipulated deadlines, and not settling their outstanding debt with SARS. This is not limited to the current tax year but includes substantial non-compliance across previous tax years.

It is for this reason that from October 2017 SARS will intensify criminal proceedings against tax offenders. Failure to submit the return(s) within the said period could result in:

  • Administrative penalties being imposed on a monthly basis per outstanding return.
  • Criminal prosecution resulting in imprisonment or a fine for each day that such default continues.

Types of tax

SARS has reminded all taxpayers that, according to the Tax Administration Act No. 28 of 2011, it is a criminal offence not to submit a tax return for any of the tax types they are registered. These tax types are:

  • Personal Income Tax (PIT)
  • Corporate Income Tax (CIT)
  • Pay as You Earn (PAYE)
  • Value Added Tax (VAT)

It is also important to note that should any return result in a tax debt it must be paid before the relevant due date to avoid any interest for late payment and legal action. To avoid any penalties, interest, prosecutions as well as imprisonment, taxpayers are urged to rectify their compliance by submitting any outstanding returns as soon as possible. Please contact your tax advisor for assistance.

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
(October 2017)

DAYS

Awesome Rewards were awarded to the following staff for September:

Shene Miller for completing perfect tax returns for Laura
Savanna Williamson for overall improvement
Shaista Ebrahim for consistency and perfection in all her work
Matthias Krafft for fantastic work on ASM
Francis Venter for wrapping 94 Santa Shoe boxes
Sharlott Modibedi for assisting in making up Santa shoe boxes.

New staff members:

A warm welcome to –

Kagiso Ramokgadi who joined Mauritz Jankowitz’ team

Money collected for Casual Day in September and October amounted to R436 and was donated to St Francis Care Centre for Cancer Month.