Voluntary Disclosure Problem - SARS

[dfp]

Hi.

I have a question on the Voluntary disclosure program offered by SARS. I have a small business that started trading in May 2011. It was relatively small for a while and I thought that it was below the taxable threshold. It has grown now to a turnover of about R60 000 - R70 000 a month, about R14 000 profit. I have registered with SARS but have not submitted a return as yet.

My business is essentially a labour broker and when I looked into it I found that labour brokers have to pay tax from cent one, at a rate of 28%. Is this correct? If this is the case I probably owe them a substantial amount of money.

I found the voluntary disclosure program and I just need to know how this works and if this would assist me in rectifying this debt? I find the tax system very confusing and I'm not sure how much trouble I'm in here?

Thanks.

 

[AchmatK]

When did business start making a profit?

Losses from previous years can be used to offset current profits.

Also what is the legal entity of the business? Pty/cc/sole prop?

I would hold off on the VDP application and get an accountant to submit the IT14.

Drop me me a pm and I'll see if I can assist in any way.
Sent from my Nokia Lumia 920 using Board Express

 

[dfp]

Hi

It is a CC. We didn't really have any months with losses. We did our first bit of business in May 2011 but the CC was registered a couple months before that.

What is the IT14 and how do I go about doing this?

Thanks for the help.

 

[marco]

I have the same turnover as you but it is not a CC. With a CC you HAVE to have an accountant or a SARS accredited bookkeeper to do your books.
Only if your business grows over R1M turnover do you need to register for VAT.
Pity that you registered as a CC. Can you not cancel this and go as a sole proprietor.
I do my own books and divide the profit between my wife and me 50/50 so little tax.

 

[HavocXphere]

I have the same turnover as you but it is not a CC. With a CC you HAVE to have an accountant or a SARS accredited bookkeeper to do your books.
Only if your business grows over R1M turnover do you need to register for VAT.
Pity that you registered as a CC. Can you not cancel this and go as a sole proprietor.
I do my own books and divide the profit between my wife and me 50/50 so little tax.

:erm: I'd love to see how you managed to do so legally. Even if married in community of property, there is no way that flies.

 

[DJ...]

I do my own books and divide the profit between my wife and me 50/50 so little tax.

So you're advising that the OP go the tax evasion route like you have? This is why you need to be banned from this section of the forum...

 

[mikef]

:erm: I'd love to see how you managed to do so legally. Even if married in community of property, there is no way that flies.

Actually would be fully legal if conducting the business as a partnership between his wife and himself.

 

[DJ...]

Actually would be fully legal if conducting the business as a partnership between his wife and himself.

The inference from his post was that he is a sole proprietor, and the "advice" that he provided was on this basis too. Unless he is failing abysmally at explaining himself, he is advocating tax evasion and various forms of accounting fraud, no doubt...

 

[undesign]

:erm: I'd love to see how you managed to do so legally. Even if married in community of property, there is no way that flies.

Because he is just so ****ing amazing. He knows little and yet achieves so much. And he shares so easily.

 

[DJ...]

Because he is just so ****ing amazing. He knows little and yet achieves so much. And he shares so easily.

LOL...

You must be one of those he claims keep PMing him to tell him how frikken awesome he is...

 

[HavocXphere]

Actually would be fully legal if conducting the business as a partnership between his wife and himself.

Not legal. There is an easy to follow explanation here.

Seriously...laymen have zero chance of structuring something like this that is 100% clean. They might be able to set something up that isn't 100% but manages to fly under the radar but thats about as good as it gets. Hell with the new s80 rules even a tax pro has a limited chance of setting up something 100% clean.

 

[DJ...]

Not legal. There is an easy to follow explanation here.

Falls into the excessive category, which is quite open to interpretation and subjectivity on SARS' part. I think he is referring to his coffee shop, where they are both 'employed' in equal roles...

 

[AchmatK]

Sole props in my experience are more prone to be audited by SARS. Of all my clients, the ones that are registered as cc's or PTY's, only one one has been audited. While every sole prop that I submit an ITR12 for gets audited. Recently had a sole prop with turnover of R200k and profit of only R45k but needed to submit every single receipt that was claimed as a business expense. The time and effort involved in preparing for a SARS audit and going through the process is costly for me and the client.

I've submitted IT14's for cc's and PTY's with turnover of over R1mil and tax losses of R1.3 without a peep from SARS. There is just more evasion happening with an SP than with cc's and PTY's.

 

[HavocXphere]

Falls into the excessive category, which is quite open to interpretation and subjectivity on SARS' part. I think he is referring to his coffee shop, where they are both 'employed' in equal roles...

Fair enough.

 

[undesign]

LOL...

You must be one of those he claims keep PMing him to tell him how frikken awesome he is...

Daily. Brilliance must be recognised and praised.

 

[marco]

Actually would be fully legal if conducting the business as a partnership between his wife and himself.

That's exactly what it is. DJ is jumping to his own conclusion here.

 

[marco]

Not legal. There is an easy to follow explanation here.

Seriously...laymen have zero chance of structuring something like this that is 100% clean. They might be able to set something up that isn't 100% but manages to fly under the radar but thats about as good as it gets. Hell with the new s80 rules even a tax pro has a limited chance of setting up something 100% clean.

Good article. My wife and I share the profits 50/50 and it is not excessive. We both work the same hours and do the same work. SARS did question it in the beginning but one email to them was all it took. We are totally above board.

 

[ToxicBunny]

Good article. My wife and I share the profits 50/50 and it is not excessive. We both work the same hours and do the same work. SARS did question it in the beginning but one email to them was all it took. We are totally above board.

Until SARS change their minds..

Its not legal, period. You are currently flying under the radar, that is all.

 

[DJ...]

That's exactly what it is. DJ is jumping to his own conclusion here.

No, you clearly explain yourself like a tongue-twisted psych patient. You were referring to sole props in your post and the inference was clear to anyone who speaks English...

 

[marco]

Until SARS change their minds..

Its not legal, period. You are currently flying under the radar, that is all.

Why do you state that it is not legal? On what grounds? Did you not read that link to the website?
The OP asked a question here that I answered and once again the attacks started on me. The OP has now ef"ed off.

With a profit of R14k, he could legally employ his wife and pay her R7k as this would be market related.

As the business grows to say R30k pm, she would have to stay on a market related wage. But now as hubby is earning more, she can save her wages and buy in and become a Partner. She will have a "loan account" and be able to withdraw more wages.

In my case, we keep the income low by decreasing our opening times. This year alone we have chopped 30 hours off pm as our kids have left home and we have no need for extra money. (Our investment dividends make up for any emergencies) This way SARS is satisfied with my wife getting 50%.
I stand to be corrected.