General Tax queries

[HavocXphere]

Nice thread. The advice given looks pretty solid so far.

What now ? Do I believe you or SA.RS ?

You are comparing what Greg C says about plain travel allowance against what SARS says about reimbursive travel allowance.

Unsurprisingly the two do not match.

am I missing something.

More than I care to explain. Greg C strikes me as the patient type though so maybe he will explain (some more).

Tell me, but with some backup from SAR-S sources.

Sleep on it.

http://en.wikipedia.org/wiki/Imperative_mood#Usage

 

[Greg C]

Good morning to the both of you.

First off let me just say ofcourse there is no fighting, I guess my tone came back as rather spiking but it was meant to.
It has indeed come out that you dislike SARS and the tax system and whilst I agree there are alot of uneccessary taxes and unfair ones to boot,it is tax whether you like it or not,that gives you electricity,puts staple foods in the shelves of stores and allows you to drive to work without droppping down a 2 metre hole,given not everything is perfect and we have corrupt individuals but please lets stick to the problems at hand,and deal with THINGS IN CONTEXT

WHy i say IN context is your quotes,are being pulled from different sections of travel allowances

But lets answer the first question,to try and circle back and link back what I have been trying to say shall we

Allowance:as per your request straight out of SARS
In s 8 (1)(a)(i) the stipulates that all amounts paid or granted as an allowance or advance must be included in taxable income.In the case of travel allowance,subsistence allowances and public officers' allowances,there shall be included in the taxable income of any person any allowance or advance paid or granted to that person by his principal excluding any portion expended on:
Travel for business purposes
Accomodation,meals and other incidental costs incurred whilst he is obliged by reason of his duties to spend at least on night away from his usual place of residence in south africa
carrying out duties necessary for the holding of public office.

Now onto your section:
The fixed -cost component is based on the cost of the vehicle,including VAT but excluding finance charges or interest.If the vehicle was held under a lease that was an installment credit agreement or was acquired by Mr X on the termination of such a lease,the fixed-cost componen would be based on ther amount of the cash value of the vehicle under the lease,which includes any VAT paid by the lessor under the lease
Mr X is not obliged to use the table and is entitles instead to furnish an acceptable calculation based upon ACCURATE DATA.IF ACTUAL COSTS are used it will include the following
WEar and tear on vehicle(take s 8(1)(b)(iiA)(bb) into account
actual fuel costs
actual maintenance costs
insurance
Finance Charges(take s 8(1)(b)(iiA)(bb) into account)
license cost
THe actual costs are added together and the deductible amount = total cost x business km/total km

Just to keep what I am saying going to circle back.

What is a fringe benefit Greg? You keep saying its a benefit,but a Travel allowance isnt a Fringe benefit is it?

That is exactly what a travel allowance is my good man.
Fringe benefits are payments made by employers to employees, usually in a form other than cash.The taxable value of fringe benefits(referred to as the 'cash equivalent') is included in GROSS INCOME throught the application of par (i) of the definition of gross income in s 1 of the Act.In terms of s8(1),the amount of any allowance or advance paid or granted by a persons principal(as defined),excluding the portion spent for the specified business purposes is included in TAXABLE INCOME

Hope this clears a few things up guys.

 

[Greg C]

Oh and just to answer your very nice direct question.

Do NOT believe me.SARS is your source.
What I am here for is to help you interpret what the Acts say,the idea behind them and answer real life questions to the best of my ability.
If you would recall,no money has passed my hands,not a cent of your tax has come to me so there is no benefit to me other than me trying to help people,inform them and attempt to help people get over their fear of tax.

So keep the questions coming along people. WE can always meet as well and discuss but that is up to you.

 

[mass09]

Nice thread Greg!

 

[Greg C]

Thank you very much.Would be nice if more people would post though.I am dying for a new issue or question.

Nice thread Greg!

 

[andwoo8182]

Hi guys,

I have a pretty straightforward query if anybody could help me out here. I'm a fairly new taxpayer and sorting out my last return was super easy. Employer registered me & all my IRP5's fell within the last year. Registered on efiliing, filed return & refund in my account in a few days.

However, I am trying to help a friend to has only recently started working full time again (Nov 2011).

So, she has worked for a few months in the 2009/10 year, and a few months in the 2010/11 year, and has her IRP5's, but as she was below the threshold in both tax years (and cause she didn't really think about it) she didn't file any returns. She will probably also fall below the threshold in the year just past (2011/12) and so there's no real urgency to file anything. However we would like to get things in order, and so I will be sorting out her registration on e-filing shortly, but I have one query:

1) Once registered on e-filing, will we be able to file old returns to ensure she get's back tax withheld once she's fully up to date on her latest returns? I assume all IRP5's will automatically show up on the system, as they did with mine. Basically I want to file her
2009/10 and 2010/11 returns (if its not too late) and then eventually her 2011/12 return so that when she is legally required to file for 2012/13 (which she will be as I think she'll be above the threshold) that she will be completely up to date, and will be able to receive any old taxes deducted as well as any rebates for that year.

Any help would be appreciated! Thanks!

 

[Greg C]

All sounds generally in order. Very important that whoever she worked for in this case did indeed do the IRP5 correctly,and that it was submitted correctly and as up to date with everything then yes everything should and I say should as you never know.

We rely heavily on our employers and their payroll to sort these issues out on our behalf during the year so that our filing is painless but I speak for myself when I say that you are only as good as the information that was provided.

But again everything should be in order.Good luck,

Hi guys,

I have a pretty straightforward query if anybody could help me out here. I'm a fairly new taxpayer and sorting out my last return was super easy. Employer registered me & all my IRP5's fell within the last year. Registered on efiliing, filed return & refund in my account in a few days.

However, I am trying to help a friend to has only recently started working full time again (Nov 2011).

So, she has worked for a few months in the 2009/10 year, and a few months in the 2010/11 year, and has her IRP5's, but as she was below the threshold in both tax years (and cause she didn't really think about it) she didn't file any returns. She will probably also fall below the threshold in the year just past (2011/12) and so there's no real urgency to file anything. However we would like to get things in order, and so I will be sorting out her registration on e-filing shortly, but I have one query:

1) Once registered on e-filing, will we be able to file old returns to ensure she get's back tax withheld once she's fully up to date on her latest returns? I assume all IRP5's will automatically show up on the system, as they did with mine. Basically I want to file her
2009/10 and 2010/11 returns (if its not too late) and then eventually her 2011/12 return so that when she is legally required to file for 2012/13 (which she will be as I think she'll be above the threshold) that she will be completely up to date, and will be able to receive any old taxes deducted as well as any rebates for that year.

Any help would be appreciated! Thanks!

 

[Tosser]

Donations

Donations

Question: if I make donations to family members, is this tax deductable for me?

I’m sure it’s deductable for certain registered charity organisations, but what about for family members that I support via regular donations?

TIA

 

[krono9]

Tax deductable if you have an Sec18A certificate in your hand. To your family, you can just make a tax free donation up to R100 000 per year, after that you PAY donations tax...

 

[Tosser]

thanks krono

Maybe I'm being doff here, but to test my understanding...so if I give a family member say R10 as a donation, at the end of the tax year when I declare my taxable income, I can declare the donation of R10 and this will reduce my income tax accordingly?

 

[Celine]

thanks krono

Maybe I'm being doff here, but to test my understanding...so if I give a family member say R10 as a donation, at the end of the tax year when I declare my taxable income, I can declare the donation of R10 and this will reduce my income tax accordingly?

no you cannot claim donations to your family. only donations to a specific charity or otherwise that issues you with a certificate can be claimed for tax purposes.

 

[Tosser]

aaaah, thanks for that clarification

 

[Zak87]

@ skywalker

That proviso where you don't get taxed on re-imbursive allowances less than R3.05 per km and and less than 8k business travel is specifically where you submit to your employer business km's and then he re-imburses you at a rate per business km that you supplied. This proviso specifically excludes the monthly "general" travel allowance that you get when you structure your salary.

I.e I am saying there is 2 types of travel allowances
1. A general allowance every month as per your salary structure irrespective of business km travelled
2. An ad-hoc allowance based only on the business km you travel

That proviso doesn't apply if you recieve a general allowance

With regards to structuring your salary - allocating more to travel allowance will help you save temporarily on monthly PAYE
The reason is that SARS only includes 80% of a travel allowance in your monthly PAYE.

However this is only a timing issue, as at the end of the year when you fill out your return, SARS will demand the 20% back.

As long as you keep accurate records of your business travel, you may then be able to claim back up to 100% of your travel allowance, but this will depend on the value of your vehicle, and the ratio of business to total km's that you did in the year.

I don't work in tax, but I've studied it at an honours level

 

[4cer]

@ skywalker

That proviso where you don't get taxed on re-imbursive allowances less than R3.05 per km and and less than 8k business travel is specifically where you submit to your employer business km's and then he re-imburses you at a rate per business km that you supplied. This proviso specifically excludes the monthly "general" travel allowance that you get when you structure your salary.

I.e I am saying there is 2 types of travel allowances
1. A general allowance every month as per your salary structure irrespective of business km travelled
2. An ad-hoc allowance based only on the business km you travel

That proviso doesn't apply if you recieve a general allowance

With regards to structuring your salary - allocating more to travel allowance will help you save temporarily on monthly PAYE
The reason is that SARS only includes 80% of a travel allowance in your monthly PAYE.

However this is only a timing issue, as at the end of the year when you fill out your return, SARS will demand the 20% back.

As long as you keep accurate records of your business travel, you may then be able to claim back up to 100% of your travel allowance, but this will depend on the value of your vehicle, and the ratio of business to total km's that you did in the year.

I don't work in tax, but I've studied it at an honours level

was going to say thats where they are going wrong. Its not a Non-taxable allowance if you get a R2k a month travel allowance. It is a re-imbursive allowance only. So i.e. you go to clients, you show the employer what you have driven for business and they pay you that exact amount. It will fluctuate each month.

ya im busy doing CA honours so i'm not a specialist, but i know a bit

 

[Greg C]

no you cannot claim donations to your family. only donations to a specific charity or otherwise that issues you with a certificate can be claimed for tax purposes.

Celine is 100% here. In essence there needs to be a quick seperation of donations.
There are "two"

There are the donations that you speak of where there is a exemption of 100 000 for the year.
Donations made over this amount will be taxed at 20%, SARS will attempt to collect said tax over the 100 000 declared from the donor(you giving your family member X) or the donee.If you decide not to pay, and the doneee(person receiving) also decides not to pay you both will be jointly and severally liable for the tax payable to SARS

In simple terms for future donations.A rule of thumb would be
NEVER accept a donation from anyone unless they can pay the donations tax.

2ndly the S18 donation is exactly what celine said,it relates to registered non profit organisation in general and is exempt,but only if you present that certificate.So if you donate a big amount to say the SPCA,make sure you ask for a certificate.

Hope all this helps

 

[Tosser]

yup, thanks Greg, that's nicely explained by you guys & gals there. Much appreciated.

 

[Greg C]

yup, thanks Greg, that's nicely explained by you guys & gals there. Much appreciated.

Always a pleasure....NEXT !!!

 

[JacquesZA]

Hi,

Tax question here:
If i resign and take my provident fund, how much tax will i pay?

 

[Celine]

Hi,

Tax question here:
If i resign and take my provident fund, how much tax will i pay?

what are your provident fund contributions? you will pay according to the lump sum tax scale - which quite frankly i think is wrong. the tax deducted from a lump sum is only a provision made from the lump sum and when you get assessed at the end of the year the lump sum will be added into your earnings, taking you into another tax bracket.

when i was at SARS and doing tax directives for lump sums, we got as close to the correct tax deduction for the lump sum, i.e. we would look at the previous years assessment and tax according to the percentage of that years income. now the table is just giving random percentages to use for the administrators and for SARS.

 

[KalMaverick]

As you dont pay tax currently now in a personal capacity it does not affect you personally in any way.
However if your father in Law did charge rent, your company would need to pay for it,and then may be deducted so in this case I would suggest having your father charge rent and your company pay it as at the end of the tax year you may deduct it and thus REDUCE your overall companies tax payable.

My suggestion,assuming your business will be somewhat profitable.Have your father in law charge you appropriate rent(appropriate meaning an amount relative to size and place,not R500 for instance in Sandton) and then deduct it

Can you explain how this works exactly?

If his father charges him/the company R5 000 rent, it will have to be actually incurred in order to be able to deduct it.

So how does incurring rent and deducting it work out better then not paying rent at all?

I'm a little sleepy so might be missing something.