New tax bills have recently been signed by President Cyril Ramaphosa, these finance-focused bills came into effect in January 2021 and all South African Business owners should be aware of them.
“The most important change that applies to all tax payers is the one that criminalizes negligent non-compliance. This, and other administrative changes mean that taxpayers will be held to a higher standard, which serves as a cue for everyone to take ownership of their tax affairs” – Cyril Ramaphosa.
Business owners are now even more responsible for full financial transparency, from filing to making business payments correctly and on time – when it comes to these new tax regulations, you’ll want to ensure that you comply.
But just what are these new bills and what do they really mean for SMEs? Here are the 5 key SARS regulations you shouldn’t overlook for your business.
1. Accounting for VAT:
Negligent non-compliance can be observed when a business owner does not disclose revenue or profit. Non-compliance can also be a failure to declare additional income that should be taxed. This is a discrepancy that leads to an inevitable and costly audit by SARS.
While there are business owners who are intentionally negligent, there are many business owners who are simply (and understandably) confused by tax and compliance. We encourage you to know the difference between zero-rated VAT items and VAT exempt items as these details are crucial for your business. For more information, you can find VAT exempt items in South Africa here.
2. Deductible Tax:
Throughout our years in this industry, we’ve been trusted with the tax planning of countless businesses and because we know deductible tax can often feel like a grey area. Here’s our easy guide to learn more.
Deductible tax, simply put, is a deduction that lowers the government-imposed tax or ‘taxable income’ of a business, for SME’s, business expenses are one such example of deductibles. While business expenses can serve as a perk in reducing taxable income, it’s important to keep in mind, the kind of business expenses that will qualify. Good examples of this include day-to-day expenses such as office supplies, phone costs as well as travel and transport costs. Essentially, deductible tax is any expense incurred in the operation of a business where the business can benefit.
3. E-filing Compliance:
E-filing for many business owners can often feel like an additional admin task however, it is essential for any business, not only does it keep you in good books with SARS but compliance and organisation in your e-filing provide long-term benefits that make applications for relief and rebates much easier. We recommend this SARS guide to learn more download this SARS guide. Contact us for your unique business needs!
4. Tax relief for SMMEs:
Tax relief can be seen as the programs or policies that reduce the amount of taxes paid by individuals or businesses. In order to qualify, we recommend that you keep up to date with information pertaining to your business.
Did you know?
SARS has stipulated tax relief for the following:
The expansion of the Employment Tax Incentive (ETI);
Employees’ Tax Deferral of 35% of an employer’s total employees tax liability;
Provisional Tax Deferral of 35% of a taxpayer’s provisional tax liability;
and Payment Holiday for skills development levy contributions.
Contact us to learn more and for SARS FAQ’s check out official SARS FAQs for tax relief here.
5. VAT refund:
You work hard for your earnings as a business owner so we understand your frustration when you need a refund, you’re busy so you need everything around you, to work as hard as you do.
VAT refunds are payable by SARS to vendors this means that SARS is required to pay the refund within 21 business days – failure to do so will result in SARS having to pay interest. To ensure this process goes smoothly, ensure you complete your VAT return correctly. Ensure that you’re registered under Category A or B and that you’re fully compliant. This means you will have registered for all required taxes, have no outstanding tax returns, and no tax debt.
While new laws and bills are likely to get introduced, a trustworthy team to ensure compliance and transparency are crucial tools every business owner needs to keep on the right side of SARS!
If you value financial well-being as we do, contact us to learn more about how our services can help your business.