2018 Budget Speech

Entrepreneurs, we get it, you’re busy, so here’s the 2018 Budget Speech in a nutshell

 

The Finance Minister’s speech included the following:

• The budget deficit is projected to decrease from 4.3% in 2017/18 to 3.5% in 2020/21
• It is expected that gross debt will rise to 56.0% of GDP in 2020/21
• This year’s proposed tax measures will raise an additional R36 billion in 2018/19

What will you be paying more for?
• VAT is for the first time in our democratic history being increased: from 14% to 15%, effective 1 April 2018
• To promote eco-friendly choices, the plastic bag levy, car emissions tax and the levy on incandescent light bulbs will be increased
• Sugary beverages will now be taxed under a new health promotion levy from 1 April 2018
• The fuel levy has been increased by 52 cents/litre
• Alcohol and tobacco excise duties will be increased between 6-10%
• Estates worth more than R30 million will now be taxed at 25%
• Any donation in excess of R30 million in a tax year will be taxed at 25%

How will Government be providing financial support?
• Social development spend has been increased the most, by 9.2% over the MTEF
• Social grants will see R528.4 billion being spent over the MTEF
• The child support grant will increase from the baseline of R380 to R400 on 1 April and then to R410 on 1 October 2018
• The old age, disability and care dependency grants increase to R1 690 on 1 April and to R1 700 on 1 October 2018
• Higher education and training is receiving R324 billion in total over the MTEF
• Basic education, including infrastructure, learner and teacher support receives R792 billion
• For various purposes, including helping with the challenges of the drought, a provisional budget of R6 billion has been set aside. This includes short term disaster relief grants to the value of R473 million in 2018/19
• The HIV/AIDS and TB conditional grant receives R66.4 billion over the MTEF
• Subsidised public housing receives R123.3 billion over the MTEF

Coming Clean with the Tax Man – What are my options?

Very few business owners we’ve ever met consider the SARS a friend. In fact, given the option, the majority would happily overpay their taxes if it meant that they never heard from the Tax man.

So, if you’re one of the unlucky few who’s tax affairs are not in order, what options are open to you?

If it’s a simple case of non-submissions of Income Tax, PAYE, VAT, forms etc. for a dormant business, then hurry down to the SARS and submit the required NIL returns and be done with it. If you don’t want to wait in the very long queues, then pay a professional to do this for you.  

Failure to submit will unfortunately still lead to a summons as this is the only way the SARS is able to compel you to adhere to the law.

If, however your non-submissions or inaccurate submissions are as a result of monies owed to the fiscus (SARS), then the route to redemption is a little more complicated.

Traditionally those fearing prosecution, would submit amended returns showing their full exposure to the SARS and then fall on their mercy or the mercy of the courts to avoid very stiff penalties and or prosecution.

Fortunately, in recent years the SARS has proven itself a friend to business by initially introducing a Voluntary Disclosure Programme and now more recently a Special Voluntary Disclosure Programme.

So, what’s the difference, I hear you asking? 

Well essentially:

 

Our experience has shown that just like snowflakes, each tax payers circumstances are unique, therefore do not attempt your application as a DIY project, rather consult a professional.

At Phezulu VBO we do more than just assist clients with tax planning, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website or give us a call on 010 003 8558

Financial Year End – You and your Business!

So, in case you weren’t aware of it, 28 February signifies the end of the financial year for all individuals, trusts and most companies.

Ever wondered why the Financial year end is so close to Christmas? It’s the SARS’s way of extending the season of giving! In their minds preferably from you to them, rather than the other way around J

Now, with this very important date rapidly approaching, what should you be aware of to ensure the “season of giving” is skewed in your favour?

Individuals

 

• Log Book – If you get a travel allowance make sure your logbook is up to date by recording your closing kilometres for the year on 28 February.
• Retirement Annuity – Is there an option for you to make a “top up” payment?
• Donations – Are your deductions tax deductible? If they’re made to Section 18A organisations they are.
• Section 12J Investment – This is a new one, but any investments into a S12J company are 100% tax deductible.

 

Companies and Trusts

 

• Small Business Corporation – Check if your business qualifies as an SBC and benefit from a sliding scale of tax as well as accelerated depreciation benefits.
• Donations – Are your deductions tax deductible? If they’re made to Section 18A organisations they are.
• Section 12J Investment – This is a new one, but any investments into a S12J company are 100% tax deductible.

 

At Phezulu VBO we do more than just assist clients with planning for their financial year end, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website or give us a call on 010 003 8558

Year End and your Business – What you need to know?

So, you’re closing up shop in a few days, done with the year and ready to forget your troubles whiling away the hours on holiday?

If you really want your holiday to be stress free, consider the following important points that could make all the difference.

Business Checklist

• Do your clients and staff know what to do when an emergency pops up while you’re away? If not, put the procedures in place now. Clear procedures reduce stress and increase productivity.
• Your year-end VAT and PAYE is calculated and provided for.
• If you are the staff, designate clear times when you’ll be available to assist client’s without spoiling your holiday.
• Crime is unfortunately a reality so ensure your insurance is up to date and provides adequate cover.
• Inform you security providers you’re away, so they can pay special attention if an alarm goes off.

Personal Checklist

As cheap as flights are becoming, the majority of us will be travelling by road to our holiday destinations. And with our road death toll being what is, you need to ensure:

• Your will is up to date
• Your vehicle has been serviced, is road worthy and insured
• Your medical cover is in place and up to date

Don’t forget, holidays are for relaxing and family fun, so clear your worry list and enjoy your holiday! We know you’ve worked hard, so have fun, you deserve it J

At Phezulu VBO we do more than just assist clients with planning for the holidays, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website or give us a call on 010 003 8558

Your Small Business and Tax – Cool video

Last week we looked at Small Business Corporations Tax as a follow up click on the link below and watch this very cool video from Prof Matthew Lester – http://www.biznews.com/matthew-lester/2016/09/14/matthew-lesters-video-intervention-tax-and-the-entrepreneur/?platform=hootsuite

At Phezulu VBO, we do more than just assist clients with their taxes, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registrations to Payroll and Mentoring.

For more information, please visit our website http://www.phezulu.net or give us a call on 010 003 8558

 

Small Business Corporations Tax – Do you qualify?

Small Business Corporations Tax – What is it? Do you qualify?

Is your business viewed as a Small Business Corporation by SARS?

• Is your business Turnover less that R20 million per year?
• Are the shareholders in your business all natural persons?
• Do you only own your one business?
• Does less that 20% of your turnover come from “investment” income?
• Is less than 20% of your income from rendering a “personal” service?

If you have answered YES to all the above questions your business could be making massive Income Tax savings.

Are the Small Business Corporation Income Tax Savings worth it?

The table below will illustrate the savings:

 

Taxable Profit	Small Business Tax	STD Business Tax	Tax Saving
0 – 75 000	0	21 000	21 000
75 001 – 365 000	21 000	102 200	81 200
365 001 – 550 000	59 150	154 000	94 850
Above 550 001	28%	28%	Nothing from this point

 

Besides the Income Tax savings, how else to you gain from being a Small Business Corporation?

• SBC’s are allowed to depreciate their productive assets at a faster rate than other businesses. Depreciation, although not a physical cash cost, is captured as an expense on your income statement thereby reducing your profit and as you can see from the table above, smaller profits equals less tax.

 

• Shareholders of SBC’s who pay the maximum rate (i.e. 41%) on their income, have the opportunity to gain a tax benefit by using a mixture of salary and dividends.

As you can see the correct tax planning will save both you and your business money, therefore when chatting to your advisor be very open about your goals and how you plan to reach them.

The more information we have the better we can assist you with a suitable plan, however please bear in mind that although we advise you not to obsess about your tax planning, you should review your plan every six months at least.

At Phezulu VBO we do more than just assist clients with planning their taxes, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website www.phezulu.net or give us a call on 010 003 8558

Provisional Tax – IRP6 – What is it?

What is it?

 Provisional tax is not a separate tax. It is a method of paying tax due, to ensure the taxpayer does not pay large amounts on assessment, as the tax liability is spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which are based on estimated taxable income. A third payment is optional after the end of the tax year, but before the issuing of the assessment.

Who is it for?

 Any person who receives an income other than a salary, is a provisional taxpayer. A provisional taxpayer is:

• a natural person who derives income, other than remuneration or an allowance;
• company; or
• person who is told by the Commissioner that he or she is a provisional taxpayer.

Excluded from being a provisional taxpayer as defined are any –

• Any natural person who does not earn any income from carrying on any business – provided that person’s taxable income will not be more than the tax threshold; or
• the taxable income of that person (earned from interest, foreign dividends and rental from letting of fixed property) will not be more than R30 000;

When should it be paid?

 The first provisional tax payment – IRP6/1 – must be made within six months of the start of the year of assessment for 31 August or six months after the approved financial year end date.

The second payment – IRP6/2 – must be made no later than the last working day of the year of assessment ending 28/29 February.

The third payment is voluntary and may be made –

• within seven months of the year of assessment, where the year of assessment ends in February, which is 30 September and
• within six months of the year of assessment, in any other case.

At Phezulu VBO we do more than just assist clients with their provisional taxes, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website www.phezulu.net or give me a call on 010 003 8558

Private Company…..what is it?

In our very first Blog we looked at the different business types you as an entrepreneur would probably need to consider when starting out, in this series of blogs we will look at these business types in a little more detail.

The most common business “type” would be a Private Company. This type of business requires formal registration with the CIPC , which should take between 5 and 10 working days.

One of the most important things to remember when registering a private company is that it is a separate legal entity from you the Shareholder (Owner). As such, it must have its own bank account and all formal documents (letterhead, invoice, legal agreements, etc.) need to have the following information displayed on them – Registered Name, Registration Number, Directors, Registered Physical Address.

The next big thing to remember when running a private company is that you could qualify as a Small Business Corporation (SBC) and be taxed on your business profits at a much lower rate than the standard 28%. Besides the savings in income tax, there are also massive savings through accelerated depreciation and dividend taxes.

When your business reaches a point where you need to hire staff or begin invoicing more than R1million per year, the standard procedures as any other business will apply and you will need to register the business for UIF, Workman’s Comp, PAYE and VAT.

Lastly we need to look at the risks associated with owning and managing a private company. One of the perks of the private company being a separate legal entity is it is responsible for its own mistakes and the shareholders can only lose what it is that they have invested and no more. The downside risk here though is, if you the shareholder are also a Director, then you could be liable for any losses if it can be proven that you were not acting in the best interest of the company.

We recommend attending a Directors responsibility course as the new Companies Act, comes down pretty hard on delinquent directors.

In this series I will be diving a little deeper into many of the topics I raised in our “Year in the Life” of a business series started last year, so feel free to visit our website to see what we’ve already covered.

At Phezulu VBO we do more than just assist clients with their company registrations, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website www.phezulu.net or give me a call on 010 003 8558

2016 TAX SEASON – IS CURRENTLY OPEN

2016 TAX SEASON – IS OPEN!!

For those people out there who have been focused on Brexit (Britain leaving the EU) and or the start of The Tour de France, we have important news that you might have missed…….The 2016 Tax Season has started without you.

The 2016 Tax Filing season started on 1 July 2016 and will close on 25 November 2016 (for e-filing clients) and while you might think November 25^th is a long way off, experience has shown us that it often creeps up much quicker than most of us would like. So this year, get ahead of yourself and file as quickly as possible.

For those who are unsure, the 2016 tax year runs from 1 March 2015 to 28 February 2016 and to help you with your preparation below is a list of the most common items included in a tax return.

• Salary, pension and annuities: IRP 5 certificates or IT 3(a) certificates
• Interest received or accrued (local and/or foreign): IT3(b) certificates
• Travel Logbook: 
Please note that from 2010 you may not claim your mileage if you did not keep a logbook.
• Other South African income: Rental income, business/freelance income (if IRP5 or IT3 (a) not issued by employer) etc. If married in community of property, the rental- and investment income of your spouse must also be provided, as well as the foreign taxes (if any) paid by your spouse. If the source of this income was as a result of an inheritance specifically excluded from the joint estate, you do not have to provide this information in respect of your spouse.
• Dividends: Details of local dividends (even though it is tax-free) and foreign dividends received or accrued.
• Lump sums: Certificates reflecting lump sums received as a result of retirement from a pension fund and/or retirement annuity fund.
• Capital Gains Tax (“CGT”):
CGT became effective from 1 October 2001 and you are requested to provide the market value as at 1 October 2001, as well as selling price and date of sale of any item that qualifies for CGT, e.g. property which is not your primary residence, shares, bonds, Kruger Rands etc.
• Expenses incurred in the production of income:
Proof of all expenses incurred in the production of commission-, rental-, business-, and/or freelance income.
• Medical expenses:
 Proof of medical subscriptions (if any) and expenses not recovered from a medical aid. (Note that non-prescribed medicine does not qualify). Completed confirmation of diagnosis of disability form (ITR-DD), Proof of all expenses incurred as a result of permanent physical or mental disability, which could not be claimed from a medical aid.
• Home office:
 expenses in respect of an office at home may be claimed, unless a business is run from home.
• Contributions to Retirement Annuity Funds (“RAFs”):
Certificates reflecting contributions to RAFs.
• Donations:
Certificates/receipts reflecting donations (if any), these certificates must be issued in terms of section 18A of the Income Tax Act No. 58 of 1962.
• Retired individuals:
If you retired during the tax year, please provide Forms A and D which can be obtained from your employer/pension fund.
• Bank: Details of your bank account, i.e. name of institution, branch code, account number and type of account

At Phezulu VBO we do more than just assist clients with their tax returns, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website www.phezulu.net or give me a call on 010 003 8558

Becoming successful in your small business, not busy!

How do I exchange my busy worklife for a successful one?

At Phezulu Business Management we know the success vs busy debate has been haunting entrepreneurs for longer than we have recorded information on the subject. Why is it such a big deal? If you’re successful, aren’t you busy?

While we know the measure of success is both a subjective as well as an emotive issue, therefore for the purposes of this blog we are going to look at “success” and “busy” in the very narrow sense where success equals more money and busy equals how much time am I spending in achieving this goal.

Many a poor spouse, family member or friend has often heard the lament “I work 10 to 14 hours a day and am so busy, yet at the end of the month I have very litte to show for it financially”

So, how is it possible that one can be so “busy” and yet not achieve your goal of earning more money?

Busy, according to the dictionary is defined as “full of activity”, but it doesn’t define what this activity is or should be, as a result we group all activities under “busy” and this is the beginning of our downfall. What we very quickly need to do is separate our “busyness” into “productive” and “non productive” activities and then focus more of our time on the activities in the productive column.

Now this sounds easy enough, however if it was this easy, why is it still such an issue in our daily lives? The truth is, this is a real problem because the majority of people are too “busy” to prepare a list of their monthly activities, therefore below is a simple step by step guide to get you going:

1. Prepare a list of all the outstanding activities that need your attention.

2. Sort these activities into productive and non productive activities. If you are unsure how to deceide ask yourself this simple question “Is this activity going to earn me money (productive), or distract me from earning money (non productive)?”

3. Prepare a daily activity list with allocated time slots. The bulk of your day must be taken up by productive activities, with one or two of the more pressing non productive activities.

4. Delegate as many activities as possible to members of your staff, then train them on steps 1 to 3 above.

5. Repeat daily as new activities are identified ☺

The above process will keep you focused on the important tasks of earning money while identifying those activities that can either be delegated or put on the back burner to be attended to at a later date, thereby freeing up more of your time to enjoy running your business.

At Phezulu we do more than just mentor clients in time management, we are in fact your one stop SME shop, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration, Payroll and Mentoring.

For more information please visit our website http://www.phezulu.net or give me a call 087 945 0449

Tyronne Nel