Tax/UIF Question

blunomore said:
Are you saying that if person A gives person B Rx every month just for the hell of, and he gets nothing in return, person B is liable for taxes on it?
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http://www.gt.co.za/Publications/Budget07/Tax-schedules/donations-tax.asp

Its not that simple.

Spouses can donate to each other tax free as long as its not done specifically to dodge tax( Section7(2) of the income tax act). But the company is not a natural person and hence cant be your spouse.

But generally, Person A is taxed on it after the threshhold( -20% above R100 000). And that 20% is levied on after tax income on Person A...

IF PersonA is a legal person only the limit comes down to R10k a year I think

At least this is how I understand it, but I'm no Tax lawyer
 
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Blu, it's all dependant on the company's circumstances. Is it a CC? How many members in the CC? Firstly, the household allowance you speak of would be a donation, which is taxable at 10% iirc (not sure about this one). Regular donations would attract the attention of SARS and even the Scorpions though but that's dependant on the turnover of the company.

There are special dispensations regarding taxation and it's based on turnover. You should declare a salary still though as depending on what you declare, it might fall below the 28% taxation paid by CCs (iirc). See if you receive the cash as a salary, you are liable for the taxation - if the company retains the cash and pays it in the form of a dividend or even donation, it is liable for the 28% taxation and then whatever tax applies to the way in which the funds are distributed to individuals (dividends, donations etc).

What might be worth your while is looking into the car allowance aspect before it is scrapped completely - especially the company car side of things. You'll have to speak to your accountant about this though, however I know that under certain conditions a company car can become very tax efficient.

But then again, a lot of this is changing rapidly...
 
DJK said:
Blu, it's all dependant on the company's circumstances. Is it a CC? How many members in the CC? Firstly, the household allowance you speak of would be a donation, which is taxable at 10% iirc (not sure about this one). Regular donations would attract the attention of SARS and even the Scorpions though but that's dependant on the turnover of the company.

There are special dispensations regarding taxation and it's based on turnover. You should declare a salary still though as depending on what you declare, it might fall below the 28% taxation paid by CCs (iirc). See if you receive the cash as a salary, you are liable for the taxation - if the company retains the cash and pays it in the form of a dividend or even donation, it is liable for the 28% taxation and then whatever tax applies to the way in which the funds are distributed to individuals (dividends, donations etc).

What might be worth your while is looking into the car allowance aspect before it is scrapped completely - especially the company car side of things. You'll have to speak to your accountant about this though, however I know that under certain conditions a company car can become very tax efficient.

But then again, a lot of this is changing rapidly...
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No legal vehicle, DJK, Mr Blu is the sole proprietor, so it is in his name.
 
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