Business Link

It’s approaching year end for many Business Link readers, and as a service, we have put together this short check-list.

Assessed losses: If your business expenses exceed the income for the tax year then you’ll end up with an assessed loss for tax purposes. SARS allows you to use the assessed loss against future taxable income. The loss can be carried forward indefinitely, provided you continue to trade. If there is no trading at all during a tax year, the assessed loss will be forfeited.
Family members on payroll: If your spouse and children work for you, make sure they actually do some work! If they don’t, SARS can disallow the business expense claimed.
Interest received from SARS: If you receive interest from SARS, then it’s taxable in your hands. Declare the interest in the correct financial tax year.
Hope you kept a logbook for your company vehicle: If you can prove to SARS that you’ve used your company vehicle for less than 10 000km private use, you can claim a refund of your personal income tax return
Traffic fines: Traffic fines and other similar penalties can’t be deducted from income tax.
Independent contractors: Where an individual who is an independent contractor receives regular payments from you or is subject to your supervision and control, you must withhold employee’s tax. The fact that they are registered as provisional taxpayers and/or charge VAT on their invoices will make no difference.
Recovered legal cost is taxable income: If the CCMA or Labour Court awards you legal costs, these recovered costs become taxable.
Tax directives for retrenchments: Apply to SARS for a tax directive when an employee is retrenched. If you don’t apply for the directive, you have not complied with the provisions of the Income Tax Act.
Payroll compliance: Since payroll is such a huge component of the tax net, it’s an obvious target area for audits by SARS. It’s vital that you pay close attention to your compliance strategies. A small investment in time, thought and planning could potentially save you penalties.
Pay your employee’s tax: Don’t withhold employee’s tax. Don’t apply any deducted employee’s tax for anything other than payment to SARS. If you’re caught, you’ll be liable to a fine or imprisonment for a period of up to 12 months.
Keep records for five years: SARS require that you keep all records for a period of five years from the date of the last entry.
Unused subsistence allowances: If you pay a subsistence allowance to an employee, but that employee doesn’t travel for business purposes to the extent of the allowance granted, by the end of the following month the allowance becomes subject to employee’s tax in that month.